Essay Dividend Policy as a Strategic Tool for Wealth Maximization

12356 Words Apr 18th, 2013 50 Pages
CHAPTER ONE 1.0 INTRODUCTION
1.1 BACKGROUND OF STUDY
The owner or shareholder of any business expect their investment to earn a return that reward is expected to be commensurate with the perceived riskiness of the investment.
There are many alternative vehicles for the investment of capital, so a particular investment often be said to carry an opportunity cost. This is the difference between the actual return forgone from the alternative investment, olowe (1997) noted that the maximization of shareholders wealth is the most superior of all the objectives considers timing of return, take account of both return and risk and it balances short and long-term benefits. There is an important incentive sectors companies.
In the case of a
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2. Ho: shareholder’s wealth cannot be maximized through retained earnings.
H1: shareholder’s wealth can be maximized through retained earnings.
1.6 SCOPE AND LIMITATION OF STUDY
The study would focus extensively on the dividend policy companies and how it affects their wealth maximization objective. The Nigeria bottling company plc shall be the focus of the study period restricted to its financial year. Relevant dividend policy theories ranging from traditional theories to relevancy school shall be highlighted and discussed in detail. The study would also identify the factors influence dividend policy of public companies.
A major limitation of this study is that it would only focus on one public company and as such the generalization of the findings of the study may be subjected to certain cautions several other factors that influence the dividend policy of the company would be excluded.
This is due to the focus of the study.
1.7 SIGNIFICANCE OF THE STUDY
The primary significance of this study is that it would help to fill the gap in the existing literature by empirically examining the shareholders wealth maximization impact of managements disbursement choices, thereby supplementing and extending current research in this area.
Besides, by operating in an integrated framework that is examining the stock market’s reaction to dividend, the research will be able to account for

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