Effects of dividend pay-out policy on shareholder: a case study of some selected companies on the stock exchange market

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Dividend policy and how it affects shareholder value has become an important subject to Ghanaian investors. Over the last four years, returns on Short-term investment instruments have decline considerable. Ghanaian Investors’ attentions have now turned into investment in shares of Company listed in Ghana Stock Exchange. Investors will therefore be interested in how incomes earned and distributed and how the distributions affect their total return and value. The growth of investors’ interest in the Ghana Stock market operation presents a challenge the managements of public Companies on how to distribute surplus incomes generated to meet the current income needs of investors and the growth needs of the Companies. The objective of the study is to determine the extent to which dividend policy affects shareholders value and to identity factors that determine dividend policy and type of payout ratios used by the companies. Both primary and secondary dates were obtained from Companies listed Ghana Stock Exchange for the study over a five year period (2002 - 2006). In all 14 Companies were sampled for the study. The analysis of the data was done by the use of Fisher’s model and factors which affect dividend policy decision were also analyzed. The study identified that all the classical factors which affect dividend policy behaviour are at worry in many and diverse ways within the Ghanaian environment. Further the model could not fit into the observation to establish any predictable relationship between dividend and shareholder value.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Business Administration, 2008