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Archive for the ‘Dividend Policy’ Category

Dividend policy regarding the decision to distribute profits as dividends or reinvested in order to keep him in the company (retained earnings). Dividends paid to shareholders depends on the policies of each company, so it takes a more serious consideration from the management company. Consequently, the task of financial managers are required to be able to determine the optimal dividend policy, which creates a balance between current dividends and future growth. Therefore, in determining the company’s dividend policy will need to consider various factors that influence it so as to maximize the value of the company.
Based on the above thinking, the author tries to do research in a thesis entitled â Factors Analysis of Dividend Policy and Its Effect on Price bought shares.
This study aims to determine dividend policy factors that include the position of solvency, liquidity position, profitability (ROA), and the size of both companies simultaneously and partially on the value of the firm as reflected in market price of company stock in the banking industry sector in 2003.
In this research used observation units are 19 companies in the banking industry sector that has gone public or have been listed on the Jakarta Stock Exchange (JSE). The research method used in this research is descriptive method. The method of analysis used is multiple regression analysis.
Based on test simultaneously, dividend policy factors have a significant influence on the market price of company stock with a value of determination coefficient of 44.02%. Based on partial testing, there are only a factor of dividend policy that significantly influence the market price of company stock, namely the level keutungan (ROA). While the dividend policy of the other three factors, namely the position of solvency, liquidity position, and company size does not significantly influence the market price of company stock.

Many insurance companies offer dividends each year to policyholders. Often, policy owners do not understand how they earn dividends. Usually there are three different places that an insurance company can receive money that they can pass on to customers as dividends. If you know what dividends are, you can make a more informed decision on how to use the money.

Divisible Surplus
Policy dividends are calculated by adding the surplus that was used for premium expenses and dividing any extra between the people who paid more than they needed to during the year. Essentially, an insurance policy dividend is like a tax refund for your insurance premiums. The dividends are determined after the company pulls money to fulfill contractual obligations, business expenses and any contingencies. Any surplus after these expenses is returned to customers as dividends.

Expense Savings
One of the largest areas that produce dividends for customers is the area of expense savings. In the insurance business, these savings could come from mortality savings and savings on general expenses. Mortality savings are accrued when fewer death claims are paid out through the year than the company budgeted for. General expense savings occur from any area of the business that saves money throughout the year. Generally this rarely occurs, but when it does, dividends are higher. Read the rest of this entry »

The question of what factors determine a company’s dividend policy is a matter of a good deal of controversy, both in boardrooms and in universities. There is little room for doubt, though, that in many situations corporations feel constrained by their debt load and minimize or suspend dividends in order to service debt.

Significance

An obvious impact of debt upon a company’s dividend policy is that a company with a lot of debt must keep up with interest payments, and this limits the cash flow available to pay dividends.

Debt Covenants

A debt covenant is a formal agreement between lenders and a borrower about how the latter will conduct business. These covenants often explicitly limit dividends.

Signaling the Market

A company may want to pay dividends, whatever its level of debt, because one of the functions of a dividend payment is to signal the market that the issuer is confident and healthy.