The roots of the literature of determinants of dividend policy relate to the linter (1956) who conducted a traditional study on how U.S. managers formulate dividend decisions. He developed a compressed mathematical model supported on survey of 28 well recognized industrial U.S. firms which is measured to be a finance standard. In the perception of him the dividend imbursement model of a firm is prejudiced by the existing year earnings and year before dividends and after that the work was polished by the Fama and Babiak (1968) theory test of a number of alternate models for clearing up dividend behavior chains Lintner's position that managers increase dividends only after they are rationally certain that they be able to lastingly continue them at the new level. And after the both Linter and Fama and Babiak many researcher study the linter model.
Showing posts with label finance essay. Show all posts
Showing posts with label finance essay. Show all posts
27 Apr 2012
Discriminant Analysis
Hair et al. (2006) explains discriminant analysis as a multivariate dependence technique basically used to predict and explain nonmetric variables as in the case of present study. The independent variable used in the study is a categorical variable i.e. credit risk rating reflected in nonmetric nature of variable. As multiple regression deals primarily with metric variables, multiple discriminant analysis is a technique used for nonmetric ones. The primary purpose of MDA is to spot the group to which the object belongs.
Determinants of Bank Performance
There is an huge amount of literature is available that seeks to identify the determinants of bank performance. Where some studies focus on the understanding of bank profitability in a particular country, others focus their analysis on a panel of countries. In the literature, bank profitability, usually measured by the return on assets (ROA) and/or the return on equity (ROE), is typically expressed as a function of internal and external determinants. Internal determinants are causes that are mainly influenced by a bank’s management decisions and policy objectives. Such profitability determinants are the level of liquidity, credit risk, capital adequacy, operating expenses management and bank size. On the other side, the external determinants, macroeconomic, are variables that reflect the economic environment where the credit institution operates.
Capital Asset Pricing Model
The capital asset pricing model provides an equation for determing the return on a stock. It states that the expected (average) excess return on a stock depends on the expected excess market return according to the following relationship. In the formulation, the estimated beta can be obtained from a time series regression of the stock’s excess return on the excess market return. The risk of a stock and hence the average return on that stock should depend on the volatility of its return and not on this peculiar variable beta which the higher the stock’s own volatility, the higher should be the average return on the stock. So the relative average returns on two stocks should depend on the ratios of their return volatilities and not the ratio of their betas.
Conceptual Framework
A conceptual framework is a statement of theoretical principles that provides guidance for financial accounting and reporting. (Collins & Hussey, 2007). It therefore prescribes the nature, function and limits of financial accounting and financial statements.
The IASB's Framework for the preparation and presentation of financial statements sets out the concepts that underlie the preparation and presentation of financial statements that external users are likely to rely on when making economic decisions about an enterprise.
Bankruptcy and Debt Consolidation
Are you among the thousands of people worried about losing your car or home because of not being able to pay your bills? Not able to seep comfortably as receiving phone calls from debt collector and notices from your creditors?
Don't be scared as there are people like you facing financial issues in this time of economic crisis. For some the financial crisis is the outcome of a family problem, illness and for few others it is due to the not being able to manage the money because of the overspending habit.
Attractive Centres for Foreign Direct Investment
According to the survey by International consultant firm Ernst and young India have fourth position in most attractive country and the preferred location for back office functions and call centre. The firm survey 2006, said the US and China top two preferred countries to remain for international decision makers.
In 2006 India’s rating is average with the last year, according the survey adding that the country still insulated behind china in attracting foreign direct investment.
Islamic Banks the Factors that Affect Loss Provision
The purpose of this study is to investigate issues relating to income-smoothing practice in a new context and to examine for Islamic banks the factors that affect loss provision for loans and investment in Murabaha, Musharka, and Mudarabah
Islamic banks offers a unique environment to test income smoothing, compared with conventional banks operating in many other countries, since they adopt the dynamic provisioning policy. Smoothing is supposed to be perfect when the variation coefficient is nil or/and the determination coefficient is equal to the unit. Results show that 49 (75%) banks have a determination coefficient between 0.5 and 1 and 44% banks have a variation coefficient less than 0.5 (29 from 66).
16 Apr 2012
Choosing the Right Stock
Investing is a very personal, potentially life altering concept. Learning how to buy your very first stock is a little like enrolling in school- financial school. So let's treat the process like that, a class in buying stocks. Welcome to Buying Stocks 101.
First lesson: Sit down and review all of your financial information. Do you even have enough venture capital to consider investing? Do you understand market terminology and jargon? Do you know how to read a stock chart or track a stock's progress? Have you picked up a newspaper or watched a news program lately?
Bank Mergers
The number of bank mergers in 1990s has increased 215%. (Becher, D.A., 1999) From 1987 to 1997, the value of mergers and acquisitions in the world financial industry has reached nearly 1.4 trillions of US dollars. (Cybo-Ottone, MurgiaSince, 2000) Since bank mergers become popular, there has a controversy about whether bank acquisitions create value for target and bidder shareholders. This paper gives a literature review about this paradox and it is divided by four parts. First part is the reasons for bank mergers. Second part shows the literatures before 1990.
Interaction between Monetary Policy and Stock Price
The interaction between monetary policy and stock price is a multi-faceted argument which engaged many researchers in a heater debate for ages. As early as in 1960, researchers start to show substantial interest in identifying the influence of monetary policy on equity market's performance. Sprinkel(1964) employed monetary portfolio model supported the view that growth rate of money supply could serve as a leading indicator of stock price changes. The co-movements in stock market has been documented by numerous acadamics including Homa and Jaffee (1971) Kochin (1972) and Modigliani (1972).
Event Study
It is worth mentioning that the event study methodologies have for long been a very popular subject of interest amongst many financial analysts and researchers across the globe. It has been chosen as a research topic for writing this paper because an extensive amount of research has already been carried out on this interesting subject related to stock prices reaction to certain economic events especially to the earning announcements, therefore, it is due to this reason that valuable assistance could be attained from the large amount of resource material, data, journals and articles available from the event studies performed earlier.
Debt and Equity
Capital Structure can be described as the appropriate amount of debt and equity which is used to finance a firm. There are lots of theories that speak about changes in the debt ratios along with capital structure and the changes in the ratios of firms which might appeal to be irrelevant to capital structure (Modgliani & Miller 1958). This was proposed by them to all of the related theories to capital structure. Bevan and Danbolt (2002) states that short-term debt unites with the structure of the firm when the firm concentrates on long-term debt resulting in yield of limited explanatory power.
Phenomenon that Stocks Exhibit Higher Returns in January
The excess returns for stock price in January have long been documented in literatures. Numerous studies have been carried out with the attempt to explore the root cause of this January anomaly. In this paper, three categories of explanations, namely price-pressure hypothesis, omitted risk factors and transaction costs, mismeasurement problems, are presented with both supportive and opposing arguments from empirical evidences. It can be concluded from the review of those studies that the existence of January Effect cannot be attributed to a single factor, and the reason for the presence as well as persistence of this anomaly is still a puzzle worth investigating.
Islamic Banks the Factors that Affect Loss Provision
The purpose of this study is to investigate issues relating to income-smoothing practice in a new context and to examine for Islamic banks the factors that affect loss provision for loans and investment in Murabaha, Musharka, and Mudarabah.
Islamic banks offers a unique environment to test income smoothing, compared with conventional banks operating in many other countries, since they adopt the dynamic provisioning policy. Smoothing is supposed to be perfect when the variation coefficient is nil or/and the determination coefficient is equal to the unit.
Case - Tata Steel Acquisition of Corus
The board of directors of Anglo-Dutch steelmaker Corus has accepted a $7.6 billion takeover bid from Tata Steel.
The deal is the largest Indian takeover of a foreign company and will create the world's fifth-largest steel group.
In 2005, Tata Steel was only the world's 56th biggest steel producer and its takeover of Corus represents its first expansion outside Asia.
Tata Group chairman Ratan Tata has consent that it has agreed to acquire the European steel company at 455 pence per share, putting the enterprise value of Corus at about $10 billion.
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