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NEED FOR STUDY Many dividend factors influence in

payment First

decision the



framework could determine whether companies pay or do not pay

dividends. The common law for instance prohibits the payment of dividends out of capital amounts even where the entitys memorandum of association and articles of association allows. Further legal provisions such as those of Section 263 of the UKs Companies Act 1985 prohibit

dividends payment from distributable profits when such perturbs the equilibrium between the net worth and capital amounts of the firm.

Having a clear delineation of the procedure of dividend proposal could thus help establish various controls in the company. Through a dividend policy that encompasses profitability, liquidity and other determinants; companies can avoid payment of excessive amounts as dividends and prevent excess liquidity that motivates imprudent managerial practices. Whether dividend policy proves effective in generating desired feedback may however be subject to investor behaviour rationality or irrationality thereof.

Among the factors identified to provide such motivations in the study were changes to the earnings level. Accordingly, managers were compelled to either distribute a portion of any substantial earnings increase to shareholders or cut back dividends in case of substantial or progressive earnings decline. Thus, profitability of the company is contended as a

significant determinant of dividends amounts. Though playing a subtle role than profitability; liquidity, debts due, growth opportunities, taxation and restrictive provisions could also factor into the dividend policy.


Efficient Market Hypothesis states that it is impossible to beat the market because the stock market efficiency causes the stock prices to incorporate and reflect all the new information in the stock prices. We want to study whether the markets are efficient when the dividend policy is announced by the corporate. There are certain issues which are to be focused upon. They are: To find out any relation between corporate dividend policy and market value of accompany. To analyze the effect of corporate dividend decisions in terms of creating abnormality in the price and volume of the company. To check whether the markets are efficient when any news about dividend decisions of accompany is received.

RESEARCH OBJECTIVES To explore the insight f a corporate event named Dividend Policy which drags lot of attention and results into may drastic changes in the market valuation of he firm. To study the impact of dividend on the price and volume before and after such dividend is announced. To check whether abnormality exists in the price and volume of the share as the dividend is announced. To find out the room for leakage of any insider information about dividend policy of accompany To check whether any insider information plays any part in abnormal trading effect and abnormal price effect in a script. To analyze the bearing of such abnormality (if it does exist) on the market capitalization and volumes traded on the stock market a month before the

Announcement Date and a month after the ex-dividend date for all the scripts under the study. To measure the cumulative impact of corporate dividend policy and try to conceive a general trend based on it.



Research design is the plan, structure to answer whom, when, where and how the subject is under investigation. Here plan is an outline of the research scheme & which the researcher has to work. The structure of the research is a more specific outline and the strategy out, specifying the methods to be used in the connection & analysis of the data.

Descriptive Research Design

The type of research design used in this study is the descriptive research. The main characteristics of this method is that the researcher has no control over the variables and he can only report what has happened or what is happening. This study which comprises the dividend policy of LG group from the opinion of the general investor as well as insight personal of the organisation. Hence, this research study is categorized as Descriptive Research Method. DATA COLLECTION

The main source of information for this study is based on the data collection. Data collected are both primary and secondary in nature.

Primary Data Primary data have been directly collected from the general investors and employees of LG Group by survey method through undisguised structured questionnaire. Questions like open ended, close ended, multiple choice, Dichotomous question have been used for the purpose of data collection.

Secondary Data Secondary data have been collected from official website of LG and also from other supportive official websites related to project topic.

Types of questions

Open ended question Open ended question are the type of question used to get suggestion from the respondent in order to give feed back to the organization.

Close ended question Close ended question are the type of questions with a clear declined set of alternatives that confine the respondents to choose one of them.

Multiple choice question It consists of multiple choices in which the respondents can choose more than one

Dichotomous question It consists of two choices of answers in which the respondent has to choose one of them.


SAMPLING Convenience sampling is been used in the study. This type of sampling is basically used when you simply stop anybody in the street who is prepared to stop. In other words, the sample comprises subjects who are simply available in a convenient way to the researcher. There is no randomness and the likelihood of bias is high. You can't draw any meaningful conclusions from the results you obtain. However, this method is often the only feasible one, particularly for students or others with restricted time and resources, and can legitimately be used provided its limitations are clearly understood and stated. Sample size Sampling Technique : Convenience Judgmental sampling Sampling Unit : One company of BSE-500 Sampling Size :

Methods / tools of analysis

Tools used for analysis MS Excel software SPSS software

Methods used for analysis Average Graph Percentage


There were certain limitations in undertaking this research work. As it is understood that the limitations are a part of the project, they have been overshadowed by the benefits of the study.