6 - research methodology

7/30/2019 6 - Research Methodology

1/6

RESEARCH METHODOLOGY

NEED FOR STUDY

Many factors influencedividend payment decision in

corporations. First the legislative

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


2/6

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.

RESEARCH PROBLEM:

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 ofaccompany.

To analyze the effect of corporate dividend decisions in terms of creating abnormalityin the price and volume of the company.

To check whether the markets are efficient when any news about dividend decisionsof accompany is received.

RESEARCH OBJECTIVES

To explore the insight f a corporate event named Dividend Policy which drags lotof 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 suchdividend is announced.

To check whether abnormality exists in the price and volume of the share as thedividend is announced.

To find out the room for leakage of any insider information about dividend policy ofaccompany

To check whether any insider information plays any part in abnormal trading effectand abnormal price effect in a script.

To analyze the bearing of such abnormality (if it does exist) on the marketcapitalization and volumes traded on the stock market a month before the


3/6

Announcement Date and a month after the ex-dividend date for all the scripts under

the study.

To measure the cumulative impact ofcorporate dividend policy and try to conceivea general trend based on it.

SCOPE OF THE RESEARCH

RESEARCH DESIGN

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.


4/6

Primary DataPrimary 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 DataSecondarydata have been collected from official website of LG and also from other

supportive official websites related to project topic.

Types of questions

Open ended questionOpen 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 questionClose 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 questionIt consists of multiple choices in which the respondents can choose more than one

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


5/6

POPULATION

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 Methods used for analysis

MS Excel software Average

SPSS software Graph

Percentage

LIMITATIONS OF THE STUDY


6/6

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.

6 - research methodology

Documents