Payout Policy and Choice of Payout in UK Firms

by

ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

ABSTRACT

In this study we try to explore the concept of Payout Policy in a holistic context. The main focus of the research is on Payout Policy and Choice of Payout in UK Firms. The research also analyzes many aspects of the Dividend Policy and tries to gauge its effect on the firms in UK. Finally the research describes various factors which are responsible for the Payout Policy and tries to describe the overall effect of Payout Policy and Choice of Payout in UK Firms.

Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 01: INTRODUCTION1

Background of the Study1

Rationale3

Research Questions4

Aims and Objectives4

Significance of the Study5

CHAPTER 02: LITERATURE REVIEW7

Types of Dividend Policies8

Types of Dividends10

Payment reason10

Regular dividend policy10

Regular dividend policy and additional low10

Stock dividends10

Financial aspects11

Viewpoint Shareholder11

Stock Divisions11

Policy dividend payout ratio constant11

The regular dividend policy12

The extra dividend policy and low - in order12

Objective of Dividend Policies13

Legal Restrictions13

Impairment of capital14

Utilities14

Insolvency14

Excessive accumulation of profits14

Contractual Restrictions15

Internal Restrictions15

Owners Considerations15

Market Considerations16

Bird in hand theory16

Factors Influencing Dividend Policy17

Stability of Dividend Policy and Rationale18

Dividend Payments18

Procedure cash dividend18

Right of priority19

Possibilities of New Capital through the New Partners Join19

New Capital through the New Issues24

CHAPTER 03: METHODOLOGY27

Mixed Research27

Classification of research methods28

Multi-method studies28

Mixed method studies28

Steps in mixed methodology29

Strength and weakness of the mixed research:29

Strengths30

Weaknesses30

Research Design31

Research Instrument32

Literature Search32

Research Process33

Search Technique33

Inclusion and exclusion criteria34

Search Terms - Key Terms34

Reliability/Dependability34

Validity36

Appraisal limitations38

Informed Consent39

Confidentiality39

Ethical Considerations39

Suggestions41

CHAPTER 04: FINDINGS42

Survey Analysis42

CHAPTER 05: DISCUSSION62

CHAPTER 06: CONCLUSION AND RECOMMENDATIONS68

REFERENCES71

APPENDIX75

Interview Questionnaire75

CHAPTER 01: INTRODUCTION

Background of the Study

Dividends are the profits that are paid to shareholders in return for their investment. The most important objective of any company is to promote economic and social welfare of the country through appropriate capital investment. These capital investments are undertaken by the companies in order to deliver the best performance. All the companies, whether public or private, require financial resources to carry out their activities. These activities are adopted either to develop new projects or expand their existing roles. The initiation and development of new projects involves investments. Whatever the case, the means by which individuals or companies to get financial resources are in the process of operation, creation or expansion in the internal or external, short, medium and long term is known as funding sources. Domestic financing is often necessary to start very early in the development of the company when the employer is still implemented the product or business concept as most of the firm's assets are intangible (Hovakimian, Opler and Titman, 2010, pp 1).

In terms of business accounting, gross profit is the difference between total sales revenue and expenditure on wages and salaries, rents and raw materials, and any other outlays incurred ...