Corporate Finance

Corporate Finance

Introduction

There are two articles provided on the topic of dividend policy written by Duha Al-Kuwari and the other one is written by Desai, Foley and Huwaei. Both the articles provide two different scenarios or dividend policy making situations like one is how dividend policies are made in the emerging economies and the other article provides a view of dividend policy made by the multinational organizations in a developed economy. The articles aids in making the readers understand the ways of designing there dividend policy by learning different choices it could make in different scenarios. Dividends are the earnings of the shareholders against their investment in a company and the dividend policy is designed by the management of the company in order to decide which type of shareholders will receive the dividend first at what rate, what will be the voting rights of the shareholders, how much will they be involved in the decision making process and who will be the last shareholders in order to get the dividend. The answers of the questions related to the articles will help in understanding the main aim of the articles.

Discussion

The global crises have affected the dividend policies all over the world and the articles gave a view of the dividend policies in developing countries and developed countries of the world. The global financial crisis had a very serious impact on two parts of the world one was the emerging economies that is UAE and the second was the multinationals operating in the US economies. Many years ago companies either in any type of economy used to make dividend policies for more than a decade and a fix amount of dividend were offered to the shareholders. But today as the world has surrounded with the uncertainties the policies of the companies to offer a fixed dividend has changed towards a flexible dividend policy. As a corporate manager it has the responsibility of making the corporate policies of the firms so that the company is able to perform and achieve its organizational objectives. A better policy designing enable the managers to set a correct direction for its subordinates so that they are able to achieve their targets in a specific time period. The following answers can be drawn out from the two articles:

The research questions that are used in both the article is: in the first article the research question that is addressed is what are the key determinants of dividend policies for firms listed on the Gulf Co-operation Council Countries listed on the Stock Exchanges. The article will also be finding the answer of the new determinants that are influencing the amount of dividends paid to the companies in the emerging economies. The second article written by Desai, Foley and Hines (2003) answers the research question of what are the dividend remittances paid by a large panel of the foreign affiliates of US multinationals. The article conducted its research on what are the differences between the dividend policies designed for the common shareholders ...