The Relationship Between Dividend Policy And Market Risk During The Financial Crisis

by

ACKNOWLEDGEMENT

My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate.

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, the researcher tries to explore the concept of Dividend Policy and market risk. The main focus of the research is to determine the relationship between dividend policy and market risk during recession. The research also analyzes many aspects of Financial crisis and tries to gauge its relationship with Dividend policy and market risk. The most important objective of any company is to promote economic and social welfare through appropriate capital investment to those investments which deliver the best performance. For all companies, whether public or private, to carry out their activities require financial resources (money), either to develop, or expand their existing roles, and the initiation of new projects involving investments.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the Study1

Purpose of the Study1

Significance of the Study2

Aims and Objectives3

Theoretical Framework3

Research Hypothesis4

Ethical Concerns5

Appraisal Limitations5

CHAPTER 2: LITERATURE REVIEW6

Dividend Policy6

Factors of Dividend policy8

Legal Restrictions9

Impairment of capital9

Utilities9

Insolvency10

Market Considerations10

Financial Crisis11

Financial Decisions13

Investment Decision14

Dividend Patterns15

The Relationship between Dividend Payouts and Systematic Risk17

Impact of Financial Crisis on firms Dividend Policies19

Stock prices during Recession20

Relationship of Dividend policies and Market Risk during Financial Crisis21

Simple Ways Of Distinguishing between The Static Models' Theories22

Stock Market Liquidity and Firm Dividend Policy22

Market Risk24

REFERENCES26

CHAPTER 1: 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, and these activities are adopted either to develop new projects or expand their existing roles. The initiation and development of new projects involves investments. Funding source is a medium, which enable a company to generate of short and long term financial resources. It also helps in creation and expansion of all process operation (Titman and Wessels, 2005, pp. 12).

Purpose of the Study

In this study, the researcher will focus on highlighting the relationship between dividend policy and market risk during the financial crisis. Financial crisis had always be a major source of concern for companies. It is directly affecting their performance ...