Leadership Assumptions

Leadership entails enormous responsibility. To become an effective leader, one has to possess the right characteristics and implement only the right principles. However, an accurate description of a leader is yet to be determined. In fact, there are a number of faulty assumptions when it comes to what an outstanding leader really is. And these faulty assumptions, if applied to certain scenarios could actually be destructive.   It is then very important for a potential leader to determine these assumptions so as not to apply them in their managerial processes. The first faulty assumption is the idea that the development and use of one’s charisma is good enough trait to become an outstanding leader. While it is true that charisma alone may allow a leader’s subordinate to follow relentlessly, it is the be all and end all trait to ensure good leadership. Charismatic leadership may be responsible for a very remarkable impact that leaders have on their followers, but leaders should strive to use charisma with innate leadership and decision making skills in order to be successful in their respective fields (Bedell, et al 2006). The extraordinary gifts, vision, problem solving skills, and even the repeated success of the leader are all going to be important and are also used as a basis to determine whether or not the leader had effectively guided his group towards the right course. Charismatic leadership is all about vision. This means the greatness of a charismatic leader is based entirely on the way he percieves his members and the way his members percieves him. That principle alone is not sufficient. A leader that is equipped with a good vision for his organzation and a harmonious relationship with his members should also be able to make the right decisions and execute the proper solutions to problems as well. The mere use of charisma is not going to be enough (Bedell, et al 2006). Another false assumption when it comes to leadership is the idea that the possession of transformational characteristics is all that is required to lead. Transformational leadership corresponds to the creation of job satisfaction, as well as leader satisfaction among subordinates. It is also the principle that stimulates follower motivation that brings about superior group performance. These are all evident in transformational leaders because its principles allow all members to percieve their leaders as somebody exceptional purely due to their excellent job performace and overall effectiveness (Judge, 2004). But even if this is the case, transformational leadership alone is not the backbone of an efficient leader. It is a big part of a good leader without doubt, but it is definitely not all of it. Actually, transformational leadership is only the outcome of transactional leadership. This will further prove that transactional leadership is not a concept that works in direct opposition to transformational leadership. To differentiate the two, transactional leadership pertains to a leader’s ability to provide contingent rewards to members and manage his subordinates by being both exception-active and exception-passive. The false assumption behind transformational leadership can then be corrected by directly applying the concepts behind transactional leadership so that the two principles merge in complete harmony with each other. Transformational leadership should be practiced on the foundation of transactional leadership – for an outstanding leader possesses both the characteristics of a transformational leader and a transactional leader (Judge, 2004). But then again, both transformational and transactional leadership is not everything that a leader should be composed of. Authentic transformational and transactional leadership should be based on ethics as well (Kanungo, 2001). There should be some sort of a moral foundation as far as the views, action, and ideas of the leader are concerned. Although the morals of transactional and transformational leaders are based on values entirely different to each other, the idea applied is still the same (Harland et al, 2005). Transformational leaders tend to have moral altruistic motives and organic worldview on the matters they have at hand. On the other hand, transactional leaders have mutual altruistic motives and an atomistic worldview. Transformational leaders have their pricinples grounded on deontological perspective while transactional leaders ground theirs on teleological perspective (Kanungo, 2001). These are three examples of false leadership assumptions. Therefore, to become a good leader, one needs to know and apply the intellectual, social, and emotional requirements that come along with the job. The intellectual prerequisites of a good leader correspond to the level of education he or she attained to acquire the right amount of knowledge so as to create only the right rules that the whole organization should follow (Smith et al, 2005). A leader should be both psychologically and intellectually capable of predicting, deciding, and acting in favor for the betterment of the organization. This metal capability can be achieved primarily through proper schooling and advanced studies. Ideally, the leader should have finished at least one distinctive degree that is very much related to the organization that he heads. Without proper schooling, the intellectual competence of the leader will be doubted not only by his direct subordinates, but the rest of the people who works around him as well. The emotional prerequisite of a leader corresponds to his ability to feel what’s good for the group and all its members. A leader should be human enough to understand the every situation that his organization and subordinates are in. He should be able to use not only his mind but his heart as well when it comes to formulating and enacting decisions for his own company or group. A leader who uses purely his mind while at work is cold. The one who uses his sentiment along with his mind is a better picture of a good leader. A leader should also be socially competent. This means he or she should be able to relate and interact with all his members in a fair and equal manner at all times. Social skills should both be learned and practiced so that its principles can be applied in a very efficient manner. Most organizations fail because the leaders are painstakingly unreachable by their own members. The leader then should always be the first one to create an air of warmth and in the process, produce a healthy social relationship among members. This ensures that all the members working relations are always at optimum levels. References Harland, L., Harrison, W., Jones, J., & Reiter-Palmon, R. (2005). Leadership behaviors and subordinate resilience. Journal of Leadership & Organizational Studies, 11(2), 2. Judge, T. (2004, October). Transformational and transactional leadership: A meta-analytic test of their relative validity. Journal of Applied Psychology, 89(5), 755-768. Kanungo, R. (2001, December). Ethical values of transactional and transformational leaders. Canadian Journal of Administrative Sciences, 18(4), 257. Smith, B., Montagno, R., & Kuzmenko, T. (2004, Spring). Transformational and servant leadership: Content and contextual comparisons. Journal of Leadership & Organizational Studies, 10(4), 80.         

Critical Response on “Society”

â€Å"If all of this influence that this part of the country has and this musical scene has- if it doesn’t do anything with it, that would be the tragedy. † That’s Eddie Vedder talking about Seattle and the way of thinking that arose in a place laden with culture by the subgenre Grunge at that time, 1996. Moreover, the quote explains the critical stance taken in the song â€Å"Society† written by Jerry Hanan but performed by Vedder and Hanan in 2007 for the soundtrack of the movie â€Å"Into the wild† directed by Sean Penn.The context of the song formed it’s theme as, in a different time or place or language or for a different audience, the outcome would most likely have differed. â€Å"Society† echoes the values of Jon Krakauer, protagonist of â€Å"Into the wild, whose diary entries are the basis of the film. These are transcendalist views on a society that is incapable of working in harmony with nature and thereby giving one no opt ion but to exile oneself to freedom in nature. Both Hanan and Vedder have a tendency to reflect on these ideals making the song all the more suiting to the film, whose viewers are also the primary audience for the track.The English language and free speech in the USA allowed Vedder to write as he wished without constraints. â€Å"We have a greed with which we have agreed† is wordplay at its finest, which could not have been expressed so poetically and still loaded with meaning in a language like German, which often just isn’t as viable for musical purposes. The time and place were also vital in the use of language as it is clearly critical: â€Å"Society, you’re a crazy breed. In a country with censorship or where opposing the governmental system is punishable like in Soviet Russia of the mid-20th century, a lyricist would not have been able to express oneself so openly and would have had to rely more on symbols, imagery and metaphors to get their message acros s. Even though limited in quantity, literary devices were used with quality like in â€Å"Your thoughts begin to bleed† which is a metaphor for the disability of his society to think of the consequences of their ignorant behaviour and at the same time is a hyperbole with personification.If the song hadn’t been written in a country currently plagued by consumerism and greed, the theme discussed would not have the contemporary relevance it does to listeners in the Anglophonic world. Just the way the USA is famed for its decadence, it is also a well-known place for critics of this behaviour. Had this been written in the 1960’s or now, as long as still in America or Western Europe, the final result wouldn’t have varied much.The stance taken in the text is one that’s already visible in texts like â€Å"Walking† by Henry David Thoreau in 1854, who happened to also be an inspiration to Jon Krakauer. A quote from â€Å"Walking† that effective ly portrays these values is â€Å"In Wilderness is the preservation of the World†. Proven by this is, that time does play a role even though at numerous times in the past of the USA, when a social class shared such views, like the Beat Generation, a similar text could have been written.Those who chose to indulge in the movie also had a certain expectation of the soundtrack, that of it fitting in and expressing the same views. This gave Vedder’s song on the soundtrack a certain expectation from the audience he had to fulfil, which he clearly did. The point being though, had this been a movie created to portray different ideals like the life of a banker who is pleased with capitalism, then the author would have had to adapt accordingly if he still wanted his piece accompanying the images fed to the viewer and being accepted.Even though the song is only an adaptation of Vedder, its message isn’t open to a wide-range of interpretations and only the perception of it will vary from reader to reader. The general beliefs presented can’t be seen as something different, no matter what one’s background may be, than what is portrayed but the reaction might affect the understanding of the text. A dismissive attitude is taken by the singer (in first-person) who later on in the song isolates himself by referring to society first as â€Å"we† and later on as â€Å"you† and singing â€Å"I hope you’re not lonely without me† in the chorus.Even though this song has clear values of anti-commercialism: â€Å"When you want more than you have†, it explains itself and isn’t meant to be offensive to anyone: â€Å"I hope you’re not angry if I disagree† but still carries the intention to open our eyes making it all the more effective. The text would have been written differently in another place or time because the theme might have been irrelevant; in a different language it may have been limited in its poetical depth or by censorship and another audience with other expectations could have also created a completely different song.This shows the extent to which language and cultural context have moulded this text to make it what it is. Variance in one of the factors, place, time, language and audience, could have produced different lyrics with other values but as some places share similar beliefs around the same time, a piece like this could be produced elsewhere at some other time for a different audience too. ——————————————– [ 1 ]. Vedder, Eddie. Interview for Hype! Magazine (1996) [ 2 ]. Vedder, Eddie. â€Å"Society†(2007) [ 3 ]. http://www. britannica. com/EBchecked/topic/593225/Henry-David-Thoreau [ 4 ]. Thoreau, Henry David

Change for the Better

Never would he have thought that we would have ended up loving t there, falling in love, and learning about the culture as much as he did. Although a person's perception can be a good a thing, it also can get in the way of having a great friendship, learning something new, and Just being happy. Today's technology is very friendly in meeting new people on different sites like Backbone, Twitter, and Chattahoochee. Some peoples perception of meeting new people with technology that are around the world will get rid of their local cultures, traditions, and control over their cultures communication (Borderer, Borderer & Swollen, 2010, peg. 12). What people don't get Is technology Is one of the ways we learn the most about a culture. A way to get more respect for your culture Is to share It to people and not to be afraid to show It. When making friends you don't want to be the weird one, but for me seeing someone that Is so proud of their cultures Just makes me want to learn more about them . Plus you might be surprised that our cultures have some similarities and are part of the dominant culture. Having something in common is always a good base to a wonderful Friendship. Cultures in the world are what makes the world so interesting.So many different things we can learn and discover where things came from. Now some people are to proud of there country to even take the time to learn about another country because they thing its wrong and their cultures is the right way of doing things. All the different cultures have probably something in common with one an other, and you will probably find out that a lot of them Just a have some tweaks to make them different. Learning about a culture that you are going to go visit Is respectful to the people of that country whether they are Into the big tradition or not.In the end everyone is proud of their country's accomplishments and what they contributed to make the world it is today. Outsourced is a great way on showing how your pe rception affect your attitude and happiness. While Toad just wanting a burger, he went to a Mac Dona's to realize they don't sell burgers. He meets a character, named Bob, who was in the same predicament that Toad was in but for much longer. Bob told Toad that it doesn't get better until you accept Indian's culture. Once Toad finally accepted the culture he wanted to learn more about it and found a way to communicate better with the people of India.Toad was a more happy person, and even found love during his months In India. When you totally accept something, whether it's a different culture or It Is Just the way you look, you become a better and happy person. Perception Is a strong and powerful thing you use to view life situations. It Is always going to be with you whether you want it or not, and is something that we control our actions, and make up our mind about something we heaven full learned about. Perceptions can change your life for the better or for the worst. It comes dow n to how you take your perceptions and whether you let them change your life for the better.

Best buy case Essay Example | Topics and Well Written Essays - 1000 words

Best buy case - Essay Example t the current statistics of the disabled persons employed worldwide, particularly in the United States, in order to inform its employees why it is crucial to include people with disabilities in the workforce. Likewise, as Harvey (n.d.) points out in the case study, the workshop program may stress the fact described in the case study that performance ratings of workers with disabilities were found to be nearly identical to those of workers without disabilities. Such a program can assist the company to convince its employees that people with disabilities would not put additional burden on them. In addition, it is better for the organization to make necessary arrangements for its employees to visit other worksite environments that successfully practice the inclusion of people with disabilities. This strategy would motivate Best Buy employees to create an effective worksite environment characterized with the great involvement of disabled persons. Finally, it is advisable for the company to offer additional financial incentives for its employees for encouraging them to enthusiastically deal with the inclusion of people with disabilities. 2. While evaluating the Best Buy’s performance against three focus areas for INCLUDE, it seems that the company’s operations address almost all focus areas effectively. The INCLUDE group effectually utilizes the disability training, resources and innovations. To illustrate, at the request of INCLUDE members, the Best Buy management team is creating a training program concerning Autism Spectrum disorders. In terms of resource utilization, another INCLUDE chapter created an end cap with an iPad demonstrating several apps that can really help customers with disabilities. In order to improve the firm’s performance in this area, Best Buy must keep itself up to date about recent innovations that are able to fill the gaps in the workforce and marketplace. Similarly, the organization takes great efforts to provide products and services

Sainsbury's Financial reporting Coursework Example | Topics and Well Written Essays - 1750 words

Sainsbury's Financial reporting - Coursework Example The company has a joint ownership with Lloyds Banking Group and also has joint ventures in properties with The British Land Company Plc and Land Securities Group Plc (Reuters, 2011). In financial year 2010 the main joint ventures of the Group were The Harvest Limited Partnership, BL Sainsbury Superstores Limited and Sainsbury Bank Plc. In all these ventures the company has a share of 50 percent. The Directors of the company are accountable for the preparation of Annual Report, Remuneration Report and relevant financial statements as per the applicable regulations. The financial statements of the Company and the Group are prepared in accordance with the International Financial Reporting Standards (IFRS) (J Sainsbury Plc, 2010). Analysis of accounting policies a) At the end of each financial year and also in the event of any impairment indication, there is a review of the carrying value of the tangible and intangible assets by the Group to identify any impairment losses. If such indica tion is revealed then the recoverable value of the asset is calculated to determine the amount of impairment loss. If the cash flows from the assets are not independent of the other assets the Group determines the recoverable amount of the cash-generating-unit (CGU). When there exists objective evidence regarding impairment loss on receivables and loans, then the carrying amount of the financial assets is reduced to the present value of the anticipated future cash flows which is obtained by discounting the financial asset using the original effective rate of interest. For 2010 the total impairment shown in the books of the company is ?23 million. This has been with respect to assets like land & buildings and fixtures &equipments. The depreciation on the assets is provided on the basis of straight line method based on the bases of 50 years or term of the lease in the case of leasehold properties and freehold building and period of 3 to 15 years for fixtures & equipments and vehicles. Good-will is shown as an asset in the balance sheet of the Group in the respective period. It is tested annually for impairment and in the event of an indication of impairment the value of good-will is carried forward at cost minus accumulated losses on impairment. The losses on impairment are shown in the income statement in the year in which it occurs. The impairment loss in respect of the â€Å"equity instruments are not reversed†. If in a following period there is a rise in the fair value of the debt instrument classified as â€Å"available for sale† and this rise can be attributed to the happening of an event, after such loss has been shown in the income statement, then it is reversed through the company’s income statement. As per IAS 36 relating to ‘Impairment of Assets’ for impairment testing each store is treated by the Group as a CGU (cash generating unit). Tesco Plc also applies the same accounting policy for the impairment losses. Like S ainsbury the tangible assets of Tesco such as plant & equipment and property are reviewed as per IAS 36 if indications are found that the carrying amount of the asset may not be realised (Tesco, 2010). b) Sainsbury reported â€Å"Derivative financial instruments† of ?20 million in its balance sheet. The business activities of the Group make it vulnerable to financial risks that may arise in the case of exchange rate fluctuations and adverse movement in the interest rates. These risks are managed by the company using derivative instruments

The Soviet takeover of the Baltic states Research Paper

The Soviet takeover of the Baltic states - Research Paper Example This is a break from the long independent existence of the three states, which had been the norm ever since the Russian Civil War that lasted from 1917 to 1922. The Nazi occupation put a halt to the integration of the three Baltic states into the Soviet Union for four years, from 1941 all the way to 1945, but with the end of the occupation that integration resumed in earnest, and in rapid manner, so that the three states were effectively made part of the Soviet Union through a process that has been termed â€Å"Sovietization†. The traditional arrangements and institutions of the existing political, social and economic order in the three states were totally ignored and supplanted with Soviet counterparts, causing significant disruption to the lives of the countries involved. Industries were nationalized where they were previously private concerns. Land distribution and collectivization were imposed and made the norm. The school systems were supplanted by the Soviet systems, inc luding the college level curricula. The Soviet system of politics was also used to supplant the existing political systems of the time. ... sians into the three states, to shift the population balance and demographics to skew towards the Soviet Union’s preferred mix (Smith; Occupation Museum Foundation; Institute of the History of Latvia; Lina; Shtromas et al. 249-260). II. The Puppet Communist Parties/People’s Diets By the time the Soviet Union made its attempts to homogenize the political and legislative systems in the Baltic states in 1940, the Soviet Union had effected the actual control of the three countries by a series of moves that included military action, as well as the annexation and takeover of government through purges of existing members of government and their replacement with Soviet-sourced members in the main. The government elites of the three countries were purged through deportation as well as via their being put to prison. This paved the way for the introduction of the next wave of changes aimed at overhauling the people’s assemblies, effected through the illegal change of the el ectoral laws in the three counties by Soviet decree, and the calling of People’s Diets elections made on July 14 of 1940. The election was to be in the style and manner of the Soviet Union, where a single party consisting of one slate of candidates were â€Å"voted† into office, and named as the â€Å"Working People’s Leagues†. These one-slate parties were to be voted without opposition, and with a unanimity of votes. In all of the three states there were indications of suppression of other competing parties wanting to join in the elections and to present alternatives to the Soviet one-party prescription, and the suppression was effective to the degree that the Soviet will won the day. Estonia in particular was singled out for the intensity of the efforts to counter the Soviet machinations there, but in

It's all provided in the instructions Essay Example | Topics and Well Written Essays - 500 words

It's all provided in the instructions - Essay Example Therefore, by 1815 the revolution was not a success, but an ongoing struggle. Rousseau advocated for pure democracy as was practiced in Greek in the ancient period. The idea of democracy enlightened the French people after the effect of American struggle for independence. In 1792 groups of bourgeoisie called the Jacobins agitated for an establishment of a republic and thus abolish a monarchy. They did this by campaigning against the constitutionalists, monarchists and moderates. In this year, 1792, France threatened Austria with war and regarded all government as an enemy of the monarchy because it was threatened and feared the support of the bourgeoisie by external government to instigate another revolt. However, in early 1793, the monarch was overthrow and executed by the French Republic was established (Beeler et al., 2011) In February 1793, the French Republic was engaging in war with most of the countries in Europe. The Edict of Fraternity advocated for all the people of Europe to be in opposition to their leaders of all sphere including spiritual and secular rulers. The French Republic promised to support such liberation because they believed to have found a solution to political, economic and social problems. They believed in practicing equality, liberty and fraternity (Beeler et al., 2011). Therefore, the new Republican leadership foregone reforming France and benefit its people to spread the ideas of republicanism. They also feared on how to conduct domestic reform, which was desperately, needed in the country. By 1799, Europe was in constant fighting one revolution war to another. It was regarded as the fight between the French and the rest of Europe because the ideas of social equality, democracy and nationalism had root in the French Republic. On November, Napoleon captured power and he declared himself the emperor. He was later crowned as the Emperor and ruled

Functional Foods Essay Example | Topics and Well Written Essays - 750 words

Functional Foods - Essay Example The most important issue about the functional foods is the disturbance they cause in the natural mineral balance of the food products. Nature has created the consumable food products in a balanced form and no single mineral or vitamin exists in the excessive form in ordinary food materials. However, when certain vitamins and minerals are added to these food products, the natural balance is disturbed which consequently changes the nutrition value of the food. As the nutrition value of the food product is changed the intake of such foods must also be varied accordingly. Unfortunately, FDA does not put any restriction regarding the addition of nutrients to food materials. Functional foods are not treated with drugs and they can be marketed as foods without any prior permission from FDA. The only restriction that FDA puts on the manufacturers of these functional foods is regarding their advertisement and labeling; the manufacturers are required to provide all the nutrients labeled on the packing in correct proportions. Since the consumers are not aware of the use of multivitamins and additional minerals in their diet, the increasing trend of using functional foods can be harmful to the health of consumers. Some of the physicians, trainers, and physiotherapists are also unaware of the use of dietary supplements and they recommend these products to athletes and other consumers for enhancing body performance and energy levels; no such effect of these products has been observed in healthy adults. Each supplementary mineral and vitamin has specific application in human body and additional amount of these products are required in specific scenarios. Therefore the unchecked and random use of functional foods can deteriorate human health and greater amounts of these minerals could result in toxic depositions in human body. Unfortunately mineral supplements and multi vitamins are added in ordinary and everyday use foods and consumers are forced to buy and use them, thus a check and regulatory mechanism is r equired in order to ensure safe use of functional foods and dietary supplements (Thompson and Manore 187). The United States Pharmacopeial Convention is a nonprofit organization

Logistics, People and Operations--Problem Solving in Connection With Essay

Logistics, People and Operations--Problem Solving in Connection With Real Organization - Essay Example Usage of machinery is inevitable in very field or sector. In the case of logistics instead of creating the system of machines, a system of people is created. This will make the system of machines work with out any obstructions. Logistics is mainly of three types. It is business logistics, production logistics and military logistics. In this paper we deal mostly about business and production logistics. Business logistics involves supply chain management. This is because the products or services start from the supplier and reach the end user. Here inventory management, purchasing, transportation, storing, organising and planning will be integrated. The knowledge about the resources about the above topics will be combined by the managers to coordinate the resources in the organisation. This coordination will streamline the flow of the material through the network and the other coordinates the sequences of resources regarding the flow of the goods and services. In production logistics the logistical process is internal, whereas in the business logistics the process is external. This involves the flow of goods and services within a industry or an organisation, which have branches located in different areas. The machines in the work places are fed with right product due to the production logistics. The streamlining of the flow of the goods and services through a process constitute the production logistics. ... This understanding is not enough for implementation of the logistics, either that of business or production.1 Transport and warehousing logistics is the fifth largest sector that is providing employment in the states like Chicago and California in USA. Career in logistics: The initial discussion is about understanding the qualifications needed for the success in logistics. The personnel in this sector need the skills in in-time inventory, management practices and the capability of recognising the demand for material movement. One significant factor to be understood in this sector is ever growing need of work force. Though the number of opportunities is growing in all the sectors, the work force needed for a particular work is being decreased. It is not the case with the transportation and warehousing logistics. Customer service satisfaction: The requirement of staff in that sector is increasing every day. The reason is that the customers are demanding more speed and quality in transportation and warehousing respectively. The qualifications and experience for the personnel in this sector will be different from other sectors. The required skills, the career opportunities were different in nature. The personnel need the skills regarding the storage of more goods in as much less space as possible and the transportation of goods in right time to right place. The goods or the products that are to be stored and transported will be different in nature. They range from fruits to vegetables, glass to crockery, and machinery to spares. Each type requires a different type of storage and mode of transportation. The transportation of the two wheelers is different from the transportation of four

The five forces model is used for assessing the attractiveness of Essay

The five forces model is used for assessing the attractiveness of industry sector. Evaluate the key factors that need to be considered when making a assessment of the current industrial environment - Essay Example When the number of players in a market increases, revenues will be shared among competitors and hence profitability of individual firms will decrease. According to this concept, an industrial sector in which â€Å"entry barriers are high and exit barriers are low† is considered to be potential for investment (Kotler, 2009, p.226). Availability of substitutes increases the tendency of customers to switch their demand to alterative products or services. To illustrate, coffee is a close substitute for tea. While analysing the threat of substitutes in an industry, the marketer must also consider a number of factors such as buyer’s inclination to substitute, prices of substitutes, switching costs, and availability of substitutes. An industry having few close substitutes is recommended to be the most attractive segment. Buyer power indicates the customer ability to influence marketers and it mainly depends on buyer volume, availability of substitutes, and degree of market competition. An industry with low buyer power is potential for business operations. Likewise, supplier power reflects the ability of suppliers to put the organisation under pressure. When there are few substitute products/services and supplying firms, supplier power over the marketer is relatively high. Such an industrial environment would not be beneficial for a business. This factor plays a pivotal role in determining the competitiveness of an industry in majority of the cases. An industrial sector where the intensity of competitive rivalry is low is the most potential for making an investment. This model is widely used for micro-environment analysis of industries since its development. For instance, it can be effectively applied to assess the potentiality of airlines industry in order for making a decision regarding whether or not to

Pick any Business Law Case and write a 4 Page paper including a Work Essay

Pick any Business Law Case and write a 4 Page paper including a Work Cited Page - Essay Example The facts of the case were simple, Pinnacle Entertainment Inc, a Delaware corporation possessing 97% interest on Belterra Resort Indiana, transferred the title and possession of a riverboat to Belterra Resort Indiana. Pinnacle acquired the remaining 3% interest on Belterra in August of 2001. The Indiana Departments of Revenue conducted an audit of sales tax and use tax of Belterra in 2002 and proclaimed in its assessment that Belterra owed tax amounting to $1,869,783 plus interest and penalty, for acquisition of the riverboat. Belterra protested against the assessment of the Department and the Department after hearing the matter, issued a letter of findings denying the letter of protest. Belterra filed an appeal with the Indiana Tax Court. Both the parties filed for summary motion. The court in Belterra Resort Ind, LLC v. Ind. Dep’t of State Revenue, 900 N.E. 2d 513, 517 granted Belterra’s motion for summary judgment and reasoned that Belterra was not liable for use tax on its acquisition of the river boat due to the fact that the transaction was a contribution to the capital and not the result of a retail transaction (â€Å"Indiana Department of Revenue†). The Revenue Department was not satisfied with this judgment and this led to the case in hand, which was filed in the Supreme Court of Indiana. The problems which the Supreme Court had to sort out before moving with the case were numerous. Firstly, reaching a conclusion that whether the transfer of the river boat from the parent company (Pinnacle) to its subsidiary company (Belterra) was a â€Å"retail transaction† under the Indiana code section 6-2.5-3-2(a), as because the use tax can be imposed on Belterra for the riverboat only when it was acquired under retail transaction (Indiana Department of Revenue v. Belterra Resort). Secondly, the court had to determine whether the riverboat was obtained with or without consideration. Belterra argued that when no consideration was given f or the riverboat, the transaction was not a retail transaction, as  § 6-2.5-4-1(b)(2) states, â€Å"[a] person is engaged in selling retail when†¦he†¦ transfers that property to another person for consideration† (Indiana Department of Revenue v. Belterra Resort ). Thirdly, in the instant case the other critical legal issue was to find out, whether capital contribution by itself meant transfer of property without consideration. Belterra cited Grand Victoria Casino & Resort, LP v. Ind. Department of State Revenue, 789 N.E.2d 1041 to support his contention that capital contribution without consideration gave exemption from taxes (Rucker 827). Fourthly, the court had to determine whether there was exchange of some form of consideration other than cash in between Pinnacle and Belterra. The problem was to get an answer to the questions that â€Å"Was there any other benefit inuring to Pinnacle?† or â€Å"Was there some detriment borne by Belterra?† (Rucker 828). Fifthly, the court had to determine whether the presence of consideration in a transaction is enough to make it a retail sale. Justice Boehm states, â€Å"‘consideration’ is a necessary but not a sufficient condition to render a transaction ‘Selling at retail’† (Rucker 829). This however was contradictory to what Justice Rucker opined before. In the former context it was stated that when capital contribut

Learning Healthcare Organizations Essay Example for Free

Learning Healthcare Organizations Essay There are two healthcare organizations that I will be discussing that have transformational change to promote/create learning organization. One is the Centers for Disease Control and Prevention (CDC), and the other one is International Agency for Research on Cancer (IARC). CDC is a federal agency under the Department of Health and Human Services that focuses national attention on developing and applying disease control and prevention. CDC collaborates to create the expertise, information, and tools that people and communities need to protect their health through health promotion, prevention of disease, injury and disability and preparedness for new health treats. Stakeholders at CDC are people invested in the program that are interested in the results of the evaluation, and/or with a stake in what will be done with the results of the evaluation. Representing their needs and interests throughout the process is fundamental to good program evaluation. Those involved in program operations are the management, program staff, partners, funding agencies and coalition members. Those served or affected by the program are patients or clients, advocacy group, community members, and elected official. And lastly, those who are intended users of the evaluation findings are persons in a position to make decisions about the program, such as partners, funding agencies, coalition members, and the general public or taxpayers. The Centers for Disease Control and Prevention (CDC) continues its long standing dedication to improving the health and wellness of all Americans with the Community Transformation Grant (CTG) program. The CTG program is funded by the Affordable Care Act’s Prevention and Public Health Fund and  awarded $103 million to 61 states and local government agencies, tribes, and territories, and nonprofit organizations in 36 states, along with nearly $4 million to 6 national networks of community-based organizations. Focusing on priorities for change for healthier living is improving health and wellness on tobacco-free living, active living and healthy eating, and high impact quality clinical and other preventive services to prevent and control high blood pressure and high cholesterol. Also, focusing on disease prevention and health promotion that includes social and emotional wellness and healthy and safe physical environments, which facilitate the early identification of mental health needs and access to quality services. Specific community interventions includes; promotes healthy eating by supporting local farmers and developing small grocery stores where people live, protecting people from secondhand smoke exposure, improving community environments to make it safe and easy for people to walk and ride bikes. The International Agency for Research on Cancer (IARC) is part of the World Health Organization. It coordinates and conducts both epidemiological and laboratory research into the causes of human cancer. IARC main objectives are; to monitor global cancer occurrence, identify the causes of cancer, elucidate the mechanism of carcinogenesis, and develop scientific strategies for cancer control. On February 3, 2014, the International Agency for Research on Cancer (IARC) released World Cancer Report 2014, a collaboration of over 250 leading scientist from more than 40 countries, describing multiple aspects of cancer research and control. The report says about half of all cancers could be avoided if current knowledge was adequately implemented. The stakeholders are the scientist’s that has been researching for the cure of different types of cancer; patient’s that are suffering and waiting for the cure, and the leadership of the World Health organization that implements the research. The IARC activities are mainly funded by the regular budget contributions paid by its participating states. The regular budget for the 2014-2015 biennium was approved in May 2013 at a level of 40 424 491 EUR. Recent changes in the epidemiology of head and neck cancer has new findings.  Overall, the incidence of head and neck cancer is increasing in women, whereas it is decreasing in men. Chewing tobacco is a newly recognized risk factor of great public health concern. The role of tobacco smoking and alcohol as the source of cancer has been reinforced. Head and neck cancer among women in developing countries should deserve more attention, as the mortality rates appears to be higher than those of women in developed countries. For never smokers and never drinkers, more research needs to be done to identify their risk factor patterns. While it is true that advances is medical science have led to continued improvements in medical care and health outcomes, the effectiveness of management options remains inadequate for informed medical care and health policy decision making. Frequently, the result is below an optimal level or standard and inefficient care as well as unsustainable cost. In order to maintain quality of care and cost containment, evidence of comparative clinical and cost effectiveness is necessary for healthcare organization. Examples of healthcare organization that I previously discussed have the institutional lessons learned from the process that is learn along the way. As Feinstein said â€Å"a strategic plan is not worth the paper it is printed on unless its underlying vision is embedded in the organization’s culture, (Feinstein W.L. The Institutional Change Process). The most essential element of organizational change is the alignment of all relevant stakeholders to the new directions. The following are critical to achieving momentum and the successful implementation of a vision for change such as: updating the executive’s leadership style, increasing staff involvement in achieving organizational plans, helping the board understand the scope of the change, and strengthening the agency-federation relationship. Enthusiasm, persistenc e, and commitment for change by the leadership are key. References Centers for Disease Control and Prevention. (2009). Prevention and control of seasonal influenza with vaccines. Recommendations of the Advisory Committee on Immunization Practices (ACIP), 2009. MMWR Early release, 58(Early release), 1-54. Chang, S., Collie, C. L. (2009). The future of cancer prevention: will our workforce be ready? Cancer Epidemiology Biomarkers Prevention, 18(9), 2348-2351. Feinstein, W. L. The Institutional Change Process: Lessons Learned Along the Way. Journal of Jewish Communal Service. Jewish Communal Service Association of North America (JCSA), 1999. James, J. (2009). Health Organizations Theory, Behavior, and Development: 273 Saudbery Jones and Bartlett Publishers. Oreg, Shaul; Berson, Yair. Personnel Psychology. Autumn2011, Vol. 64 Issue 3, p627-659. 33p. 1 Diagram, 2 Charts, 1 Graph. DOI: 10.1111/j.1744-6570.2011.01221.x. , Database: Business Source Elite Weiner, B. J. (2009). A theory of organizational readiness for change. Implement Sci, 4(1), 67.

The Impact Of Digital Technology Media Essay

The Impact Of Digital Technology Media Essay The use of digital devices such as computers, TV, mobile phones and video game has increased substantially over the past few years globally with every corner of the globe having some form of internet available. Technology has helped humanity get things done faster and there is no doubt or shortage of recognition of these increased benefits to humanity. The most visible effect of globalization is the reach of media of all types. A number of labels have been given to describe this impact which includes media society and the information society. Arguably information and communication mediated by network and broadcast systems of all types have become more important than the workplace that defined the Industrial Age (Holmes, 2007). How far both Digital media and social media have become integrated in the lives of most of the global population is shown here as at 31st March 2011, with the exception of some third world countries such as Liberia and Ethiopia with only a .5% Internet penetration rate and St Helena with only 900 users up from zero in 2000. Africa has the lowest percentage of Internet users globally with 11.5% penetration and makes up 5.7% of internet users globally. With a population of 1.03 billion, the total Internet users are 118.8 million including 30.6 million Facebook users. At the other end of the scale Asia has the largest percentage of internet user at 44% of all users globally from its population of 3.8 billion, a penetration of 24%. China is by far the highest population of users at 485 million and India at 100 million. However China has only 504,000 Facebook users of its 485 million populations connected to the internet while Indonesia has 38.8 million Facebook users of its 39.6 million internet users. (Minwatts Marketing Group). In total the world population estimate now at 6.93 billion with 2.11 billion Internet users and 710.7 million Facebook users as at 28th September 2011Â  (Minwatts Marketing Group, 2011). The importance of the Internet in todays society is of such magnitude that Sociologists are calling it a post-broadcast, second media age rising with it questions of democracy, free speech and the public sphere (Holmes, 2007). A current debate arising from the constantly fast evolving technologies exists between those who believe technologies serve human needs and those who believe technology shapes human evolution. These beliefs arise from a trail of evolving technologies of which will end when technologies can produce more technologies, making humans disposable. Both sides of the debate agree on one factor; historical turning points are marked by technological advances such as labor, trade, transport, medicine and weapons (Carr, 2010). Further debates on whether the increasing use of digital media are good or bad for new generations have risen alongside the many concerns by parents, psychologists, psychiatrists, government institutions and health related professionals of the length of time young people spend online using either social network sites, video and computer games and cellphones. This area of concern has risen to the level of seriousness that a near formalized diagnostic mental health classification labeled Internet Addiction Disorder (IAD) globally by psychologists and psychiatrists is underway. These concerns however are further defined to excessive Internet use of which excessive is still to be further defined while the issue of IAD is so far being identified by mental health professionals when perceived as an interference with other areas of a persons life. A similar case is that of video and computer games where excessive use can be detrimental rather than beneficial to children, alongside the fact that unequivocal evidence shows violent video games are highly negative in their affects. Later in the chapter this research is presented. Much controversy surrounds the fact that Internet use provides many benefits for everyone, particularly the ability to access information of which was further extended when computers were supplied by governments to third world countries to help educate their people. While this appeared to be of some benefit educationally, on the other hand evidence for long term internet use on academic performance, even though scarce, appears more negative than positive, does not provide any strong evidence of benefits to people and in fact high internet use shows some impairment of performance over a long term. Moreover, the use of gaming is highly promoted by businesses and government agencies interested in economic benefits particularly as it is one of the highest income producers for the US economy currently. These organizations promote the benefits of the games, while many others believe it is harmful as seen in academic research. It is useful to note at this stage that TV even though not a focus of this chapter has not yet been displaced by the Internet and other new technologies and remains the highest used digital technology globally. 80% of families have cable or satellite TV and children watch at least three hours per day and four on the weekends. No matter how many new technologies emerge, TV keeps its powerful presence and has become a backdrop to family life and it can now be consumed on computers, mobiles and handheld devices (Gutnick, 2010). What are the effects of digital technology to us? Anecdotal reports have highlighted the sometimes dramatic effects both good and bad that digital media, the internet, social networking and online recreation appear to be having on the way our minds work, both physiologically and psychologically Carr, 2010, Greenfield, 2010; Wolfe, 2010; Price, 2011; Lanier, 2010) and there are a growing number of scientific studies that suggest changing patterns of brain function which have been attributed to the use of digital media. On the positive side these include improved complex reasoning and problem solving (Small et al., 2009). On the negative side they encompass difficulty in concentrating on books or long articles, becoming more easily distracted, impulsiveness, thinking that has a staccato quality and lack of concentration in general (OConaille and Frohlick, 1995). Then there are reports, particularly those that explore heavy web usage, of addiction to second life and on-line games (Chak and Leung, 2004). Support services, such as On-line Gamers Anonymous, have been set up to help people addicted to online activities. Meanwhile, experts from a range of disciplines, including neuroscience, education and technology, are often in stark disagreement about the long term benefits and costs of digital technologies to our mental functioning. Disagreements arise, not only between, but also within, disciplines. For instance, the neuroscientist Johan Lehrer dismisses concerns that digital technologies deplete our brains and regards loss of some mental functioning as cognitive trade-off (inside-the-brain.com/tag/johan-lehrer).He describes how dramatic decreases in working memory, self-control and visual attention result from simply walking down a city street and points out that while this activity may temporarily affect attention and memory, It is also an essential part of everyday life. Equally, he refutes claims that internet usage develops shallow thinking (Carr, 2010b). For Lehrer, the benefits of modern technology far outweigh the costs. By contrast, Professor Susan Greenfield, an eminent neuroscientist, former Director of the Royal Institution and author of several books on brain function, believes that repeated exposure to screen based technologies may re-wire the brain. In Greenfields view this issue is almost as important as climate change (Greenfield, 2010). She believes that excessive use of digital media may even threaten the quality of our existence if, for instance, social networking sites shortening attention spans, encourage instant gratification and make young people more self-centred and lacking inpeople-skills (Greenfield, 2003). Yet other neuroscientists, such as the team at the Semel Institute for Neuroscience and Human Development in Los Angeles who conducted some of the first studies on the effect of the digital technologies on the brain, claim that internet usage can help improve some brain functions such as complex reasoning and decision making but disrupt others, such as people skills, including empathy (Small and Vorgan, 2008). Of course the behavioural changes caused by technologies are not restricted to our brains We have all have direct experiences of the ways in which technologies have changed our lives both at work and home as indeed have our research participants. Digital media have been credited with improving communications, efficiency, availability, flexibility, speed and so on. On the other hand, studies show senior managers working harder and having longer hours than in the past. They are often expected to be available at all times; they have less status, fewer perks and stress is common (Price, 2011). According to the Chartered Institute of Personnel and Development (October 2011), stress is now the main reason for long termabsence fromwork and it is rising.As Ian Price says in his excellent Digital technologies 335 book The Activity Illusion (2011), for a number of reasons, we risk becoming enslaved by a series of work innovations that, paradoxically, were introduced in an effort to ease life i n the office (2011, p. 26). We are all aware of our own or our friends changes in behaviour; the inability to turn off our mobiles, to go 24 h without checking e-mail, to ignore Facebook, resisting the urge to check e-mails in meetings, and so on. Being connected is the norm but it can be a two-edged sword. Some of our expectations of technology have been confounded. In the 1970s and 1980s, when computers heralded a new age of efficiency and the future was envisaged as paper-free, hypertext was heralded as liberation. Introducing hyperlinks into text displayed on screen would, it was claimed, facilitate critical thinking by enabling students to compare different viewpoints. It would free up the mind. It has not worked out like this. Carr (2011) cites a number of studies that contradict these expectations. Readers of hypertext often clicked haphazardly through pages rather than reading them carefully, they were unable to remember what they had or had not read. One study compared two groups of people in their ability to answer a series of questions; one group searched online, the other searched through paper documents. The latter group outperformed the former. Research continues to show that people who read linear text comprehend more, remember more and learn more than those who read text containing links. The effect of digital technology has been determined for several causes that technology will affect human being. It is Cultural Forms, Visual Arts, Literature, Music, and Interactive Multimedia. Cultural Forms Artists working in visual art, literature, and music have begun to incorporate digital technology into their creations. In each case, they have either appropriated existing technology or created new technology to suit their particular needs. The result has been new cultural forms that have called into question the nature of the fields within which they are created, as well as the nature of the artists themselves and the roles and responsibilities of their audience. Visual Art In the field of visual art, new forms have included both two- and threedimensional works produced on computer, collaborative online art, and World Wide Web or CD-ROM-based galleries. Many artists have chosen to use the computer as merely another tool in their creative toolbox; these artists often combine traditional and digital techniques in their work, such as scanning a traditionally created watercolor and then manipulating it digitally. Many of these works are retained digitally, but often they are printed to paper (or another support, such as canvas or vinyl) and displayed like traditional artwork. Other artists maintain a similar approach, but produce threedimensional instead of two-dimensional images, and these must necessarily remain digital. Three-dimensional images are technically interactive in that viewers can rotate the image to see it from different angles or zoom in and out on details, but viewers often cannot make any lasting changes to the image. Artists working in tw o- and three-dimensional digital art have found online collaboration to be a useful tool. An artist can upload the beginning of a piece to a common server (often the World Wide Web is used), and then other artists are able to access the piece and add to it (Lovejoy 223). While artistic collaboration has certainly existed since the beginning of art itself, online collaboration gives artists physically located vast distances from one another the ability to work together as if they were in the same studio. And in a sense, they are; its simply that the studio they are occupying is virtual, rather than physical. This has provided opportunities for collaboration that might never have occurred due to physical logistics. Both digital and traditional art can now be found in virtual galleries on the World Wide Web and in CD-ROM format. Literature In literature, the involvement of digital technology has produced the cultural forms of word processing and hypertext. Word processing is, quite literally, the processing of words, in that the user inputs his or her choice of letters in order to form words and sentences. Today, users have a great deal of control over the processing of their words; they can change fonts, type size, style, and even the layout of the page if they are so inclined. These changes can be quickly applied to the entire document and modified at will. Also, entire blocks of text can be rearranged to suit the authors purpose. Word processing has changed the way literature is written. Fragments of ideas can be quickly input as the author thinks of them, and then later expanded and moved around with a few mouse clicks. An author no longer needs to interrupt his or her train of thought in order to deal with the structure or mechanics of the writing; changes can always easily be made later. However, while digital te chnology does allow the author to compose his or her thoughts in a non-linear manner, the final document, whether printed to paper or retained in digital form, almost always assumes the linear format of traditional written or printed text. There is a definite beginning and end, and the document is designed to be read linearly. Hypertext, unlike word processing, is a completely non-linear format. It requires the reader to navigate through linked blocks of text, creating a unique path that may or may not be retraced during subsequent experiences with the work. Often the reader is also able to add his or her own links to the existing hypertext structure. Other readers can then incorporate those links into their own paths if they so choose. The World Wide Web, in itself an important piece of digital technology, is essentially a gigantic hypertext. In its initial incarnation, the Web was solely text-based. The traditional novels digital counterpart is hypertext fiction. Authors such as Stuart Moulthrop, creator of Victory Garden (1991), have used hypertext to produce fictional works that allow readers to choose their own path through the story, starting at any of a number of entrance points, and encountering a different story line each time they experience the work. Readers find themselves empowered in a way never before possible. In hypertext there is no primary axis, no clear road in or out, no coordinates that have priority over any other coordinates except as the reader determines. Thus lacking an authority or guide, the reader is thrust back onto his or her self (Gaggi 103). By empowering their readers in such a manner, these authors have expanded the possibilities for literary creation. Music Musicians have been working with digital technology since its inception, and have found the computer to be a useful tool for everything from generating random sounds to controlling a sophisticated digital symphony. In recent years, a new musical genre, called techno (or more broadly, electronica), has emerged. Essentially, techno music can be defined as music that consists of mostly digitally created and sampled sounds and beats, or grooves, arranged in a repetitive, rhythmic manner and usually played at clubs and parties for the purpose of dancing. While there are myriad subgenres in the broad category of techno (drum n bass, jungle, ambient, and trance, to name only a few), they all share one common element: the involvement of digital technology in their production (hence the name techno). Techno music is created by mixing together clips of sound, known as samples. These sound clips can be culled from existing sources, such as a music CD, or they can be created from scratch using s pecialized computer software. Also, mixing can be done in the studio or live at an event such as a rave. Artists who mix in the studio often burn their creations to CD for distribution purposes, but many are turning to the popular MP3 format, which allows music to be compressed into a small file with virtually no loss of quality. The artist can then distribute these files via the Internet and reach a much larger audience. Mixing sound samples together is not a new technique exclusive to digital technology; hip-hop artists have been manually mixing beats for years using only two turntables and a mixing board. In fact, many techno DJs today still rely exclusively on analog equipment. While vinyl, for the average person, has all but disappeared in deference to the CD, in the specialized world of the DJ one finds entire stores devoted exclusively to vinyl, and most techno artists (as well as a surprising number of artists from other musical genres) release their albums in both CD and vinyl format. Despite the ubiquity of analog equipment in DJ culture, most techno artists who produce their music in the studio do use digital technology at some point. Herein lies the essential difference between a techno Interactive Multimedia In addition to affecting the cultural fields of visual art, literature, and music, digital technology has also produced a hybrid cultural form known as digital multimedia. While multimedia did exist before the advent of digital technology, digital multimedia is quite different from its predecessor. One major difference is that most digital multimedia works exploit the interactive aspect of digital technology. Viewers are able to travel through virtual space and interact with the digital forms they encounter, thereby creating new forms and pathways that they and other viewers can experience. Interactive digital multimedia is most often encountered in CD-ROM format, since the bandwidth issues of the Internet in its current state make Web-based interactive multimedia impractical for all but the most high-end user. However, new technologies are currently being developed in both file compression (i.e. Flash for animations and MPEG for streaming video) and bandwidth delivery (i.e. cable mo dems and DSL) that promise to greatly improve the capabilities of the Internet and make Web-based interactive digital multimedia commonplace in the near future. It is within interactive digital multimedia that one finds the traditional roles of artist and audience most in question. One is no longer strictly a visual artist, writer, or musician, but rather a critical cultivator, first searching to comprehend the possible meanings that emerge from this accumulation of nanocircuitry and indeterminate layers of code, then trying to reconstitute those emergent phenomena in such a way that they can become part of an evolving cultural discourse (Shaw 165). Even the genre-neutral terms producer and creator are troublesome, since the aspect of interactivity in digital multimedia makes the audience as important an influence on the development of the work as the so-called creator. While these issues do occur in other digital cultural forms as well, the very nature of interactive digital multim edia provides the most fertile environment for the exploration of these issues by both artist and audience. In conclusion Digital technology and its increasing prevalence have impacted human life radically in the last few decades. From the advent of the digital society, spawned by the invention of the computer and ENIAC, one of the first digital computers in 1946, to the present day, digital technology and computing have worked their way into more areas of life, from communications to finance to social interaction. You can see the impact daily in homes, schools and offices. The impact of computer technology on our lives makes much sector change in word of work. Computer technology is such a big factor in everyones lives today. In my own life I cannot leave my house without my mobile phone I feel secure when I have my mobile phone with me so I can be contacted or if i was ever to be in trouble I could ring my family. Also social networking is another great form of communication. people who live in different countries and want or need to contact with friends or people from across the world, they can just set up a personal profile on a social networking site and work from there doing this safely and securely for them. Computer technology is also in schools for basic training for computers themselves as people can now do online courses to further their education, fitting this into their own schedules. Skype is also a great invention as I have family who live abroad so I and my family can always talk to them and see their faces its great as you wouldnt see them for months at a time.

Dividend Payout Decision Making Process

Dividend Payout Decision Making Process CHAPTER ONE INTRODUCTION Background: Dividend policy is an important component of the corporate financial management policy. It is a policy used by the firm to decide as to how much cash it should reinvest in its business through expansion or share repurchases and how much to pay out to its shareholders in dividends. Dividend is a payment or return made by the firm to the shareholders, (owners of the company) out of its earnings in the form of cash. For a long time, the subject of corporate dividend policy has captivated the interests of many academicians and researchers, resulting in the emergence of a number of theoretical explanations for dividend policy. For the investors, dividend serve as an important indicator of the strength and future prosperity of the business, thereby companies try to maintain a stable dividend because if they reduce their dividend payments, investors may suspect that the company is facing a cash flow problem. Investors prefer steady growth of dividends every year and are reluctant to investm ent to companies with fluctuating dividend policy. Over time, there has been a substantial increase in the number of factors identified in the literature as being important to be considered in making dividend decisions. Thus, extensive studies have been done to find out various factors affecting dividend payout ratio of a firm. However, there is no single explanation that can capture the puzzling reality of corporate dividend behavior. Ocean deep judgment is involved by decision makers to resolve this issue of dividend behavior. The decision of companies to retain or pay out the earnings in form of dividends is important for the maximization of the value of the firm (Oyejide, 1976). Therefore, companies should set a constructive target dividend payout ratio, where it pays dividends to its shareholders and at the same time maintains sufficient retained earnings as to avoid having raise funds by borrowing money. A tough challenge was faced by financial practitioners and many academics, when Miller and Modigliani (MM) (1961) came with a proposition that, given perfect capital markets, the dividend decision does not affect the firm value and is, therefore, irrelevant. This proposition was greeted with surprise because at that time it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy and that a properly managed dividend policy had an impact on share prices and shareholder wealth. Since the MM study, many researchers have relaxed the assumption of perfect capital markets and stated theories about how managers should formulate dividend policy decisions. Problem Statement: Dividend policy has attracted a substantial amount of research by many researchers and theorists, who have provided theoretical as well as empirical observations, into the dividend puzzle (Black, 1976). Even though researchers and theorists have extended their studies in context to dividend decisions, the issue as to why corporations distribute a portion of their earnings as dividends is not yet resolved. The issue of dividend policy has stimulated much debate among financial analysts since Lintners (1956) seminal work. He measured major changes in earnings as the key determinant of the companies dividend decisions. There are many factors that affect dividend decisions of a firm as it is very difficult to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders resulting into increase or decrease of the firms value, but the primary indicator of the firms capacity to pay dividends has been Profits. Miller and Modigliani (1961), DeAngelo and DeAngelo (2006) gave their proposition on the dividend irrelevance, but the argument made by them was on assumptions that werent practical and in fact, the dividend payout decision does affect the shareholders value. The study focuses on identifying various determinants of dividend payout and whether these factors influence the dividend payout decision. Research Objective: There are many theories in the corporate finance literature addressing the dividend issue. The purpose of study is to understand the factors influencing the dividend decision of companies. The specific objectives of this study are: To analyze the financials of the company, to draw a framework of factors such as Retained earnings, Age of the company, Debt to Equity, Cash, Net income, Earnings per share etc. responsible for dividend declaration. To understand the criticality of a companys profitability (in terms of Earnings per share) component in declaration of dividends. To measure each factor individually on how it affects the dividend decision. Research Questions: RQ1. What is the relation between dividend payout and firms debt? RQ2. What is the relation between dividend payout and Profitability? RQ3. What is the relation between dividend payout and liquidity? RQ4. What is the relation between dividend payout and Retained Earnings? RQ5. What is the relation between dividend payout and Net Income? Contribution of the Study: Dividend decision is an important financial decision made by firms, managers, and investors. This study aims to contribute to the corporate finance literature, by looking at the Dividend puzzle. An attempt is made to make a valuable contribution in two major ways: Theoretical and Empirical approach is taken to provide a comprehensive view on the subject. The empirical Approach taken in this study will definitely leave some promising future ideas. The empirical findings and conclusions contained in this study can be used by financial managers to inform dividend decisions. Limitations of Study: The areas of concern to investigate in this study are extensive. Due to the Time constraint and accessibility of data, the research will be limited to the following: The period of study is only three years 2006 to 2008. The research has considered only those firms who pay dividends. The study is focused only on firms trading on the New York Stock Exchange. Structure of the Paper: The remaining chapters will be organized as follows: Chapter Two: Literature Review This chapter discusses the different theories laid down in context to dividend policy and explains the relationship between dividend payout and its determinants as concluded by the study of different researchers and theorists. Chapter Three: Research Methodology This chapter explains the research hypothesis and gives a descriptive study of the techniques and the model used for data analysis. The application of the statistical tests used are explained thoroughly. Chapter four: Data Analysis and Findings To address the research questions, results obtained from the regression analysis will be evaluated and discussed in this chapter. Chapter five: Recommendations and Conclusion. This chapter Concludes the entire study and provides recommendations based on the findings and analysis done in the previous chapter and recommendations for future research. CHAPTER TWO LITERATURE REVIEW Dividend remains one of the greatest enigmas of modern finance. Corporate dividend policy is an important decision area in the field of financial management hence there is an extensive literature devoted to the subject. Dividends are defined as the distribution of earnings (present or past) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy refers to managements long-term decision on how to utilize cash flows from business activities-that is, how much to plow back into the business, and how much to return to shareholders (Khan and Jain, 2005). Lintner (1956) conducted a notable study on dividend distributions, his was the first empirical study of dividend policy through his interview with managers of 28 selected companies, he stated that most companies have clear cut target payout ratios and that managers concern themselves with change in the existing dividend payout rather than the amount of the newly established payout. He also states that, Dividend policy is set first and other policies are then adjusted and the market reacts positively to dividend increase announcements and negatively to announcements of dividend decreases. He measured major changes in earnings as the key determinant of the companies dividend decisions. Lintners study was expanded by Farrelly et al. (1988), who, mailed a questionnaire to 562 firms listed on the New York Stock Exchange and concluded that managers accept dividend policy to be relevant and important. Lintners view was also supported by the study results of Fama and Babiak (1968) and Fama (1974) who suggested that managers prefer a stable dividend policy, and are hesitant to increase dividends to a level that cannot be supported. Fama and Babiaks (1968) study also concludes that Net income appears to explain the dividend change decision better than a cash flow measure. The study by Adaoglu (2000), Amidu and Abor (2006) and Belans et al (2007) stated that net income shows positive and significant association with the dividend payout, therefore indicating that, the firms with the positive earnings pay more dividends. Merton Miller and Franco Modigliani (1961) made a proposition that the value of a firm is not affected by its dividend policy. Dividend policy is a way of dividing up operating cash flows among investors or just a financial decision. Financial theorists Martin, Petty, Keown, and Scott, 1991 supported this theory of irrelevance. Miller and Modiglianis conclusion on the irrelevance of dividend policy presented a tough challenge to the conventional wisdom of time up to that point, it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy as investors seem to prefer dividends over capital gains (JM Samuels, FM.Wilkes and R.E Brayshaw). Benartzi et al. (1997) conducted an extensive study and concluded that Lintners model of dividends remains the finest description of the dividend setting process available. Baker et al. (2001) conducted a survey on 630 NASDAQ-listed firms and analyzed the responses from 188 CFOs about the importance of 22 different factors that influence their dividend policy, they found that the dividend decisions made by managers were consistent with Lintners (1956) survey results and model. Their results also suggest that managers pay particular attention to the dividend policy of the firm because the dividend decision can affect firm value and, in turn, the wealth of stockholders, thus dividend policy requires serious attention by the management. E.F Fama and K.R French (2001) investigated the characteristics of companies paying dividends and concluded that the top most characteristics that affect the decision to pay dividends are Firm size, Profitability, and Investment opportunities. They studied dividend payment in the United States and found that the proportion of dividend payers declined sharply from 66% in 1978 to 20.8% in 1999, and that only about a fifth of public companies paid dividends. Growth companies such as Microsoft, Cisco and Sun Microsystems were found to be non-dividend payers. They also explained that the probability that a firm would pay dividends was positively related to profitability and size and negatively related to growth. Their research concluded that larger firms are more profitable and are more likely to pay dividends, than firms with more investment opportunities. The relationship between firm size and dividend policy was studied by Jennifer J. Gaver and Kenneth M. Gaver (1993). They suggested t hat A firms dividend yield is inversely related to the extent of its growth opportunities. The inference here is that as cash flow increases, the coefficient of dividend decreases, indicating that smaller firms that have greater investment opportunities thus they tend not to make dividend payment while larger firms tend to have proactive dividends policy. Ho, H. (2003) undertook a comparative study of dividend policies in Japan and Australia. Their study revealed that dividend policies in Australia and Japan are affected by different financial factors. Dividend policies are affected positively by size in Australia and liquidity in Japan. Naceur et al (2006) examined the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. His research indicated that highly profitable firms with more stable earnings could afford larger free cash flows and thus paid larger dividends. Li and Lie (2006) reported that large and profitable firms are more likely to raise their dividends if the past dividend yield, debt ratio, cash ratio are low. A study was conducted by Norhayati Mohamed, Wee Shu Hui, Mormah Hj.Omar, and Rashidah Abdul Rahman on Malaysian companies over a 3 year period from 2003-2005. The sample was taken from the top 200 companies listed on the main board of Bursa Malaysia based on market capitaliza tion as at 31December 2005. Their study concluded that bigger firms pay higher dividends. For the purpose of finding out how companies arrive at their dividend decisions, many researchers and theorists have proposed several dividend theories. Gordon and Walter (1963) presented the Bird in Hand theory which suggested that to minimize risk the investors always prefer cash in hand rather than future promise of capital gain. This theory asserts that investors value dividends and high payout firms. As said by John D. Rockefeller (an American industrialist) The one thing that gives me contentment is to see my dividend coming in. For companies to communicate financial well-being and shareholder value the easiest way is to say the dividend check is in the mail. The bird-in-hand theory (a pre-Miller-Modigliani theory) asserts that dividends are valued differently to capital gains in a world of information asymmetry where due to uncertainty of future cash flow, investors will often tend to prefer dividends to retained earnings. As a result the value of the firm would be increased a s a higher payout ratio will reduce the required rate of return (see, for example Gordon, 1959). This argument has not received any strong empirical support. Dividends, paid by companies to shareholders from earnings, serve as an important indicator of the strength and future prosperity of the business. This explanation is known as signaling hypothesis. Signaling is an example factor for the relevance of dividends to the value of the firm. It is based on the idea of information asymmetry between managers and investors, where managers have private information about the firm that is not available to the outsiders. This theory is supported by models put forward by Miller and Rock (1985), Bhattacharya (1979), John and Williams (1985). They stated that dividends can be used as a signaling device to influence share price. The share price reacts favorably when an announcement of dividend increase is made. Few researchers found limited support for the signaling hypothesis (see Gonedes, 1978 , Watts, 1973) and there are other researchers, who supported the hypothesis, for example, in Michaely, Nissim and Ziv (2001), Pettit (1972) and Bali (2003). The tax-preference theory assumes that the market valuation of a firms stocks is increased when the dividend payout ratios is low which in turn lowers the required rate of return. Because of the relative tax liability of dividends compared to capital gains, investors need a large amount of before-tax risk adjusted return on stocks with higher dividend yields (Brennan, 1970). On one side studies by Lichtenberger and Ramaswamy (1979), Poterba and Summers, (1984), and Barclay (1987) have presented empirical evidence in support of the tax effect argument and on the other side Black and Scholes (1974), Miller and Scholes (1982), and Morgan and Thomas (1998) have either opposed such findings or provided completely different explanations. The study by Masulis and Trueman (1988) model dividend payments in form of cash as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm dividend policy. As the tax l iability on dividends increases (decreases), the dividend payment decreases (increases) while earnings reinvestment increases (decreases). According to Farrar and Selwyn (1967), in a partial equilibrium framework, individual investors choose the amount of personal and corporate leverage and also whether to receive corporate distributions as dividends or capital gains. Barclay (1987) has presented empirical evidence I support of the tax effect argument. Others, including Black and Scholes (1982), have opposed such findings or provided different explanations. Farrar and Selwyns model (1967) made an assumption that investors tend to increase their after tax income to the maximum. According to this model corporate earnings should be distributed by share repurchase rather than the use of dividends. Brennan (1970) has extended Farrar and Selwyns model into a general equilibrium framework. Under this, the expected usefulness of wealth as a system of barter is maximized. Despite being more robust both the models are similar as regards to their predictions. According to Auerbachs (1979) discrete-time, infinite-horizon model, the wealth of shareholders is maximized by the shareholders themselves and not by firm market value. If there does, infact, exist a difference between capital gains and dividends tax; firm market value maximization is no longer determined by wealth maximization. He states that the continued undervaluation of corporate capital leads to dividend distributions. The clientele effects hypothesis is another related theory. According to this theory the investors may be attracted to the types of stocks that fall in with their consumption/savings preferences. That is, investors (or clienteles) in high tax brackets may prefer non-dividend or low-dividend paying stocks if dividend income is taxed at a higher rate than capital gains. Also, certain clienteles may be created with the presence of transaction costs. There are several empirical studies on the clientele effects hypothesis but the findings are mixed. Studies by Pettit (1977), Scholz (1992), and Dhaliwal, Erickson and Trezevant (1999) presented evidence consistent with the existence of clientele effects hypothesis whereas studies by Lewellen et al. (1978), Richardson, Sefcik and Thomason (1986), Abrutyn and Turner (1990), found weak or contrary evidence. There is an assumption that the managers do not always take steps which would lead to maximizing an investors wealth. This gives rise to another favorable argument for hefty dividend payouts which shifts the reinvestment decision back on the owners. The main hitch would be the agency conflict (conflict between the principal and the agent) arising as a result of separate ownership and control. Therefore, a manager is expected to move the surplus funds from the high retained earnings into projects which are not feasible. This would be mainly due to his ill intention or his in competency. Thus, generous dividend payouts increase a firms value as it reduces the managements access to free cash flows and hence, controlling the problem of over investment. There are many more agency theories explaining how dividends can increase the value of a firm. One of them was by Easterbrook (1984); he proposed that dividend payments reduce agency problems in contrast to the transaction cost theory which is of the view that dividend payments reduce the value as it forces to raise costly finances from outside sources. His idea is that if the dividends are not paid, there is a problem of collective action that tends to lead to hap-hazard management of the firm. So, dividend payouts and raising external finance would attract auditory and regulatory measures by financial intermediaries like investment banks, respective stock exchange regulators and the potential investors as well. All this monitoring would lead to considerable reduction of agency costs and appreciate the market value of t he firm. Moreover, as defined by Jenson and Meckling (1976), Agency costs=monitoring costs+ bonding, costs+ residual loss i.e. sum of agency cost of equity and agency cost of debt. Hence, Easterbrook (1984) noted that dividend payments and raising new debt and its contract negotiations would reduce potential for wealth transfer. The realization for potential agency costs linked with separation of management and shareholders is not new. Adam Smith (1937) proposed that management of earlier companies is wayward. This problem was highly witnessed during at the time of British East Indian Companies and tracking managers was a failure due to inefficiencies and high costs of shareholder monitoring (Kindleberger, 1984). Scott (1912) and Carlos (1922) differ with this view point. They agree that although some fraud existed in the corporations, many of the activities of the managers were in line with those of the shareholders interests. An opportune and intelligent manager should always invest the surplus cash available into those opportunities which are well researched to be in the best interest of the shareholders. Berle and Means (1932) was the first to discover the insufficient utilization of funds which are surplus after other investment opportunities taken by the management. This thought was further promoted by Jensens (1986) free cash flow hypothesis. This hypothesis combined market information asymmetries with the agency theory. The surplus funds left after all the valuable projects are largely responsible for creation of the conflict of interest between the management and the shareholders. Payment of dividends and interest on other debt instruments reduce the cash flow with the management to invest in marginal net present value projects and for other perquisite consumptions. Therefore, the dividend theory is better explained by the combination of both the agency and the signaling theory rather than by any o ne of these alone. On the other hand, the free cash flow hypothesis rationalizes the corporate takeover frenzy of the 1980s Myers (1987 and 1990) rather than providing a clear and comprehensive dividend policy. The study by Baker et al. (2007) reports, that firms paying dividend in Canada are significantly larger and more profitable, having greater cash flows, ownership structure and some growth opportunities. The cash flow hypothesis proposes that insiders to a firm have more information about future cash flow than the outsiders, and they have incentivized motives to leak this to outsiders. Lang and Litzenberger (1989) check the cash flow signaling and free cash flow explanations of the effect of dividend declarations on the stock prices. This difference between permanent and temporary changes is also explored in Brook, Charlton, and Hendershott (1998). However, this study is based on the hypothesis that dividend changes contain cash flow information rather than information about earnings. This is the cash flow signaling hypothesis proposing that dividend changes signal expected cash flows changes. The dividend decisions are affected by a number of factors; many researchers have contributed in determining which determinant of dividend payout is the most significant in contributing to dividend decisions. It is said that the primary indicator of the firms capacity to pay dividends has been Profits. According to Lintner (1956) the dividend payment pattern of a firm is influenced by the current year earnings and previous year dividends. Pruitt and Gitmans (1991) survey of financial managers of 1000 largest U.S companies about the interplay among the investment and dividend decisions in their firms reported that, current and past year profits are essential factors influencing dividend payments. The conclusion derived from Baker and Powells (2000) survey of NYSE-listed firms is that the major determinant is the anticipated level of future earnings and continuity of past dividends. The study of Aivazian, Booth, and Cleary (2003) concludes that profitability and return on equity positi vely correlate with the size of the dividend payout ratio. The study by Lv Chang-jiang and Wang Ke-min (1999) on 316 listed companies in China that paid cash dividends during 1997 and 1998 by using modified Lintner dividend model, suggested that the dividend payout ratio is due to the firms current earning level. Other researchers like Chen Guo-Hui and Zhao Chun-guang (2000), Liu Shu-lian and Hu Yan-hong (2003) also concluded their research on the above stated understanding about dividend policy of listed companies in China. A survey done by Baker, Farrelly, and Edelman (1985) and Farrelly, Baker, and Edelman (1986) on 562 New York Stock Exchange (NYSE) firms with normal kinds of dividend polices in 1983 suggested that the major determinants of dividend payments were the anticipated level of future earnings and the pattern of past dividends. DeAngelo et al. (2004) findings suggest that earnings do have some impact on dividend payment. He stated that the high/increasing dividend concentration may be the result of high/increasing earnings concentration. Goergen et al. (2005) study on 221 German firms shows that net earnings were the key determinants of dividend changes. Baker and Smith (2006) examined 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to understand how they set their dividend policies. Their study showed that for the matched firms, the pattern of past dividends and desire to maintain a long-term dividend payout ratio elicit the highest level of agreement from respondents. The study by Ferris et al. (2006) found mixed results for the relation between a firms earnings and its ability to pay dividends. Kao and Wu (1994) used a time series regression analysis of 454 firms over the period of 1965 to1986, and showed that there was a positive relationshi p between unexpected dividends and earnings. Carroll (1995) used quarterly data of 854 firms over the period of 1975 to 1984, and examined whether quarterly dividend changes predicted future earnings. He found a significant positive relationship. Liquidity is also an important determinant of dividend payouts. A poor liquidity position would generate fewer dividends due to shortage of cash. Alli et.al (1993), reveal that dividend payments depend more on cash flows, which reflect the companys ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. They claim current earnings do no really reflect the firms ability to pay dividends. A firm without the cash flow back up cannot choose to have a high dividend payout as it will ultimately have to either reduce its investment plans or turn to investors for additional debt. The study by Brook, Charlton and Hendershott (1998) states that, Firms expecting large permanent cash flow increases tend to increase their dividend. Managers do not increase dividends until they are positive that sufficient cash will flow in to pay them (Brealey-Myers-2002). Myers and Bacons (2001) study shows a negative relationship between the liquid ratio and dividend payout. For companies to enable them to enhance their dividend paying capacity, and thus, to generate higher dividend paying capacity, it is necessary to retain their earnings to finance investment in fixed assets. The study by Belans et al (2007) states that the relationship between the firms liquidity and dividend is positive which explains that firms with more market liquidity pay more dividends. Reddy (2006), Amidu and Abor (2006) find opposite evidence. Lintner (1956) posited that the level of retained earnings is a dividend decision by- product. Adaoglu (2000) study shows that the firms listed on Istanbul Stock Exchange follow unstable cash dividend policy and the main factor for determining the amount of dividend is earning of the firms. The same conclusion was drawn by Omet (2004) in case of firms listed on Amman Securities Market and he further states that the tax imposition on dividend does not have the significant impact on the dividend behavior of the listed firms. The study by Mick and Bacon (2003) concludes that future earnings are the most influential variable and that the past dividend patterns as well as current and expected levels are empirically relevant in explaining the dividend decision. Empirical support for Lintners findings, that dividends were indeed a function of current and past profit levels and were negatively correlated with the change in sales was found by Darling (1957), Fama and Babiak (1968). Benchman a nd Raaballe (2007) discovered that the propensity to pay out dividends is positively correlated to retained earnings. Also, the study by Denis and Osobov (2006) states that retained earnings are a significant dividend characteristic for non- US firms including UK, German, and French firms. One of the motives for dividend policy decision is maintaining a moderate share price as poor stock price performance mostly conveys negative information about firms reputation. An empirical research took by Zhao Chun-guang and Zhang Xue-li et al (2001) on all A shares listed companies listed in Shenzhen and Shanghai Stock Exchange, states that the more cash dividends is paid when the stock prices are high. Chen Guo-Hui and Zhao Chun-guang (2000) undertook a research on all A shares listed before 1996 and paid dividend into share capital in 1997 as their sampling, and employed single-factor analysis, multifactor regression analysis to analyze the data. Their research showed a positive stock price reaction to the cash dividend, stock dividend policy. Myers and Bacon (2001) discussed that the debt to equity ratio was positively correlated to the dividend yield. Therefore firms with relatively more investment opportunities would tend to be more geared and vice versa (Ross, 2000). The study by Hu and Liu, (2005) declares that there is a positive correlation between the cash dividend the companies pay and their current earnings, and a inverse relationship between the debt to total assets and dividends. Green et al. (1993) questioned the irrelevance argument and investigated the relationship between the dividends and investment and financing decisions. Their study showed that dividend payout levels are decided along with investment and financing decisions. The study results however do not support the views of Miller and Modigliani (1961). Partington (1983) declared that firms motives for paying dividends and extent to which dividends are decided are independent of investment policy. The study by Higgins (1981) declares a direct link between growths and financing needs, rapidly growing firms have external financing needs because working capital needs normally exceed the incremental cash flows from new sales. Higgins (1972) suggests that payout ratios are negatively related to firms need top fund finance growth opportunities. Other researchers like Rozeff (1982), Lloyd et al. (1985) and Collins et al. (1996) all show significantly negative relationship between historical sales growth and dividend payout whereas D, Souza (1999) however shows a positive but insignificant relationship in the case of growth and negative but insignificant relationship in case of market to book value. Jenson and Meckling (1976) find a strong relationship between dividends and investment opportunities. They explain, in some circumstances where firms have relative uptight disposable Dividend Payout Decision Making Process Dividend Payout Decision Making Process CHAPTER ONE INTRODUCTION Background: Dividend policy is an important component of the corporate financial management policy. It is a policy used by the firm to decide as to how much cash it should reinvest in its business through expansion or share repurchases and how much to pay out to its shareholders in dividends. Dividend is a payment or return made by the firm to the shareholders, (owners of the company) out of its earnings in the form of cash. For a long time, the subject of corporate dividend policy has captivated the interests of many academicians and researchers, resulting in the emergence of a number of theoretical explanations for dividend policy. For the investors, dividend serve as an important indicator of the strength and future prosperity of the business, thereby companies try to maintain a stable dividend because if they reduce their dividend payments, investors may suspect that the company is facing a cash flow problem. Investors prefer steady growth of dividends every year and are reluctant to investm ent to companies with fluctuating dividend policy. Over time, there has been a substantial increase in the number of factors identified in the literature as being important to be considered in making dividend decisions. Thus, extensive studies have been done to find out various factors affecting dividend payout ratio of a firm. However, there is no single explanation that can capture the puzzling reality of corporate dividend behavior. Ocean deep judgment is involved by decision makers to resolve this issue of dividend behavior. The decision of companies to retain or pay out the earnings in form of dividends is important for the maximization of the value of the firm (Oyejide, 1976). Therefore, companies should set a constructive target dividend payout ratio, where it pays dividends to its shareholders and at the same time maintains sufficient retained earnings as to avoid having raise funds by borrowing money. A tough challenge was faced by financial practitioners and many academics, when Miller and Modigliani (MM) (1961) came with a proposition that, given perfect capital markets, the dividend decision does not affect the firm value and is, therefore, irrelevant. This proposition was greeted with surprise because at that time it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy and that a properly managed dividend policy had an impact on share prices and shareholder wealth. Since the MM study, many researchers have relaxed the assumption of perfect capital markets and stated theories about how managers should formulate dividend policy decisions. Problem Statement: Dividend policy has attracted a substantial amount of research by many researchers and theorists, who have provided theoretical as well as empirical observations, into the dividend puzzle (Black, 1976). Even though researchers and theorists have extended their studies in context to dividend decisions, the issue as to why corporations distribute a portion of their earnings as dividends is not yet resolved. The issue of dividend policy has stimulated much debate among financial analysts since Lintners (1956) seminal work. He measured major changes in earnings as the key determinant of the companies dividend decisions. There are many factors that affect dividend decisions of a firm as it is very difficult to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders resulting into increase or decrease of the firms value, but the primary indicator of the firms capacity to pay dividends has been Profits. Miller and Modigliani (1961), DeAngelo and DeAngelo (2006) gave their proposition on the dividend irrelevance, but the argument made by them was on assumptions that werent practical and in fact, the dividend payout decision does affect the shareholders value. The study focuses on identifying various determinants of dividend payout and whether these factors influence the dividend payout decision. Research Objective: There are many theories in the corporate finance literature addressing the dividend issue. The purpose of study is to understand the factors influencing the dividend decision of companies. The specific objectives of this study are: To analyze the financials of the company, to draw a framework of factors such as Retained earnings, Age of the company, Debt to Equity, Cash, Net income, Earnings per share etc. responsible for dividend declaration. To understand the criticality of a companys profitability (in terms of Earnings per share) component in declaration of dividends. To measure each factor individually on how it affects the dividend decision. Research Questions: RQ1. What is the relation between dividend payout and firms debt? RQ2. What is the relation between dividend payout and Profitability? RQ3. What is the relation between dividend payout and liquidity? RQ4. What is the relation between dividend payout and Retained Earnings? RQ5. What is the relation between dividend payout and Net Income? Contribution of the Study: Dividend decision is an important financial decision made by firms, managers, and investors. This study aims to contribute to the corporate finance literature, by looking at the Dividend puzzle. An attempt is made to make a valuable contribution in two major ways: Theoretical and Empirical approach is taken to provide a comprehensive view on the subject. The empirical Approach taken in this study will definitely leave some promising future ideas. The empirical findings and conclusions contained in this study can be used by financial managers to inform dividend decisions. Limitations of Study: The areas of concern to investigate in this study are extensive. Due to the Time constraint and accessibility of data, the research will be limited to the following: The period of study is only three years 2006 to 2008. The research has considered only those firms who pay dividends. The study is focused only on firms trading on the New York Stock Exchange. Structure of the Paper: The remaining chapters will be organized as follows: Chapter Two: Literature Review This chapter discusses the different theories laid down in context to dividend policy and explains the relationship between dividend payout and its determinants as concluded by the study of different researchers and theorists. Chapter Three: Research Methodology This chapter explains the research hypothesis and gives a descriptive study of the techniques and the model used for data analysis. The application of the statistical tests used are explained thoroughly. Chapter four: Data Analysis and Findings To address the research questions, results obtained from the regression analysis will be evaluated and discussed in this chapter. Chapter five: Recommendations and Conclusion. This chapter Concludes the entire study and provides recommendations based on the findings and analysis done in the previous chapter and recommendations for future research. CHAPTER TWO LITERATURE REVIEW Dividend remains one of the greatest enigmas of modern finance. Corporate dividend policy is an important decision area in the field of financial management hence there is an extensive literature devoted to the subject. Dividends are defined as the distribution of earnings (present or past) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy refers to managements long-term decision on how to utilize cash flows from business activities-that is, how much to plow back into the business, and how much to return to shareholders (Khan and Jain, 2005). Lintner (1956) conducted a notable study on dividend distributions, his was the first empirical study of dividend policy through his interview with managers of 28 selected companies, he stated that most companies have clear cut target payout ratios and that managers concern themselves with change in the existing dividend payout rather than the amount of the newly established payout. He also states that, Dividend policy is set first and other policies are then adjusted and the market reacts positively to dividend increase announcements and negatively to announcements of dividend decreases. He measured major changes in earnings as the key determinant of the companies dividend decisions. Lintners study was expanded by Farrelly et al. (1988), who, mailed a questionnaire to 562 firms listed on the New York Stock Exchange and concluded that managers accept dividend policy to be relevant and important. Lintners view was also supported by the study results of Fama and Babiak (1968) and Fama (1974) who suggested that managers prefer a stable dividend policy, and are hesitant to increase dividends to a level that cannot be supported. Fama and Babiaks (1968) study also concludes that Net income appears to explain the dividend change decision better than a cash flow measure. The study by Adaoglu (2000), Amidu and Abor (2006) and Belans et al (2007) stated that net income shows positive and significant association with the dividend payout, therefore indicating that, the firms with the positive earnings pay more dividends. Merton Miller and Franco Modigliani (1961) made a proposition that the value of a firm is not affected by its dividend policy. Dividend policy is a way of dividing up operating cash flows among investors or just a financial decision. Financial theorists Martin, Petty, Keown, and Scott, 1991 supported this theory of irrelevance. Miller and Modiglianis conclusion on the irrelevance of dividend policy presented a tough challenge to the conventional wisdom of time up to that point, it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy as investors seem to prefer dividends over capital gains (JM Samuels, FM.Wilkes and R.E Brayshaw). Benartzi et al. (1997) conducted an extensive study and concluded that Lintners model of dividends remains the finest description of the dividend setting process available. Baker et al. (2001) conducted a survey on 630 NASDAQ-listed firms and analyzed the responses from 188 CFOs about the importance of 22 different factors that influence their dividend policy, they found that the dividend decisions made by managers were consistent with Lintners (1956) survey results and model. Their results also suggest that managers pay particular attention to the dividend policy of the firm because the dividend decision can affect firm value and, in turn, the wealth of stockholders, thus dividend policy requires serious attention by the management. E.F Fama and K.R French (2001) investigated the characteristics of companies paying dividends and concluded that the top most characteristics that affect the decision to pay dividends are Firm size, Profitability, and Investment opportunities. They studied dividend payment in the United States and found that the proportion of dividend payers declined sharply from 66% in 1978 to 20.8% in 1999, and that only about a fifth of public companies paid dividends. Growth companies such as Microsoft, Cisco and Sun Microsystems were found to be non-dividend payers. They also explained that the probability that a firm would pay dividends was positively related to profitability and size and negatively related to growth. Their research concluded that larger firms are more profitable and are more likely to pay dividends, than firms with more investment opportunities. The relationship between firm size and dividend policy was studied by Jennifer J. Gaver and Kenneth M. Gaver (1993). They suggested t hat A firms dividend yield is inversely related to the extent of its growth opportunities. The inference here is that as cash flow increases, the coefficient of dividend decreases, indicating that smaller firms that have greater investment opportunities thus they tend not to make dividend payment while larger firms tend to have proactive dividends policy. Ho, H. (2003) undertook a comparative study of dividend policies in Japan and Australia. Their study revealed that dividend policies in Australia and Japan are affected by different financial factors. Dividend policies are affected positively by size in Australia and liquidity in Japan. Naceur et al (2006) examined the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. His research indicated that highly profitable firms with more stable earnings could afford larger free cash flows and thus paid larger dividends. Li and Lie (2006) reported that large and profitable firms are more likely to raise their dividends if the past dividend yield, debt ratio, cash ratio are low. A study was conducted by Norhayati Mohamed, Wee Shu Hui, Mormah Hj.Omar, and Rashidah Abdul Rahman on Malaysian companies over a 3 year period from 2003-2005. The sample was taken from the top 200 companies listed on the main board of Bursa Malaysia based on market capitaliza tion as at 31December 2005. Their study concluded that bigger firms pay higher dividends. For the purpose of finding out how companies arrive at their dividend decisions, many researchers and theorists have proposed several dividend theories. Gordon and Walter (1963) presented the Bird in Hand theory which suggested that to minimize risk the investors always prefer cash in hand rather than future promise of capital gain. This theory asserts that investors value dividends and high payout firms. As said by John D. Rockefeller (an American industrialist) The one thing that gives me contentment is to see my dividend coming in. For companies to communicate financial well-being and shareholder value the easiest way is to say the dividend check is in the mail. The bird-in-hand theory (a pre-Miller-Modigliani theory) asserts that dividends are valued differently to capital gains in a world of information asymmetry where due to uncertainty of future cash flow, investors will often tend to prefer dividends to retained earnings. As a result the value of the firm would be increased a s a higher payout ratio will reduce the required rate of return (see, for example Gordon, 1959). This argument has not received any strong empirical support. Dividends, paid by companies to shareholders from earnings, serve as an important indicator of the strength and future prosperity of the business. This explanation is known as signaling hypothesis. Signaling is an example factor for the relevance of dividends to the value of the firm. It is based on the idea of information asymmetry between managers and investors, where managers have private information about the firm that is not available to the outsiders. This theory is supported by models put forward by Miller and Rock (1985), Bhattacharya (1979), John and Williams (1985). They stated that dividends can be used as a signaling device to influence share price. The share price reacts favorably when an announcement of dividend increase is made. Few researchers found limited support for the signaling hypothesis (see Gonedes, 1978 , Watts, 1973) and there are other researchers, who supported the hypothesis, for example, in Michaely, Nissim and Ziv (2001), Pettit (1972) and Bali (2003). The tax-preference theory assumes that the market valuation of a firms stocks is increased when the dividend payout ratios is low which in turn lowers the required rate of return. Because of the relative tax liability of dividends compared to capital gains, investors need a large amount of before-tax risk adjusted return on stocks with higher dividend yields (Brennan, 1970). On one side studies by Lichtenberger and Ramaswamy (1979), Poterba and Summers, (1984), and Barclay (1987) have presented empirical evidence in support of the tax effect argument and on the other side Black and Scholes (1974), Miller and Scholes (1982), and Morgan and Thomas (1998) have either opposed such findings or provided completely different explanations. The study by Masulis and Trueman (1988) model dividend payments in form of cash as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm dividend policy. As the tax l iability on dividends increases (decreases), the dividend payment decreases (increases) while earnings reinvestment increases (decreases). According to Farrar and Selwyn (1967), in a partial equilibrium framework, individual investors choose the amount of personal and corporate leverage and also whether to receive corporate distributions as dividends or capital gains. Barclay (1987) has presented empirical evidence I support of the tax effect argument. Others, including Black and Scholes (1982), have opposed such findings or provided different explanations. Farrar and Selwyns model (1967) made an assumption that investors tend to increase their after tax income to the maximum. According to this model corporate earnings should be distributed by share repurchase rather than the use of dividends. Brennan (1970) has extended Farrar and Selwyns model into a general equilibrium framework. Under this, the expected usefulness of wealth as a system of barter is maximized. Despite being more robust both the models are similar as regards to their predictions. According to Auerbachs (1979) discrete-time, infinite-horizon model, the wealth of shareholders is maximized by the shareholders themselves and not by firm market value. If there does, infact, exist a difference between capital gains and dividends tax; firm market value maximization is no longer determined by wealth maximization. He states that the continued undervaluation of corporate capital leads to dividend distributions. The clientele effects hypothesis is another related theory. According to this theory the investors may be attracted to the types of stocks that fall in with their consumption/savings preferences. That is, investors (or clienteles) in high tax brackets may prefer non-dividend or low-dividend paying stocks if dividend income is taxed at a higher rate than capital gains. Also, certain clienteles may be created with the presence of transaction costs. There are several empirical studies on the clientele effects hypothesis but the findings are mixed. Studies by Pettit (1977), Scholz (1992), and Dhaliwal, Erickson and Trezevant (1999) presented evidence consistent with the existence of clientele effects hypothesis whereas studies by Lewellen et al. (1978), Richardson, Sefcik and Thomason (1986), Abrutyn and Turner (1990), found weak or contrary evidence. There is an assumption that the managers do not always take steps which would lead to maximizing an investors wealth. This gives rise to another favorable argument for hefty dividend payouts which shifts the reinvestment decision back on the owners. The main hitch would be the agency conflict (conflict between the principal and the agent) arising as a result of separate ownership and control. Therefore, a manager is expected to move the surplus funds from the high retained earnings into projects which are not feasible. This would be mainly due to his ill intention or his in competency. Thus, generous dividend payouts increase a firms value as it reduces the managements access to free cash flows and hence, controlling the problem of over investment. There are many more agency theories explaining how dividends can increase the value of a firm. One of them was by Easterbrook (1984); he proposed that dividend payments reduce agency problems in contrast to the transaction cost theory which is of the view that dividend payments reduce the value as it forces to raise costly finances from outside sources. His idea is that if the dividends are not paid, there is a problem of collective action that tends to lead to hap-hazard management of the firm. So, dividend payouts and raising external finance would attract auditory and regulatory measures by financial intermediaries like investment banks, respective stock exchange regulators and the potential investors as well. All this monitoring would lead to considerable reduction of agency costs and appreciate the market value of t he firm. Moreover, as defined by Jenson and Meckling (1976), Agency costs=monitoring costs+ bonding, costs+ residual loss i.e. sum of agency cost of equity and agency cost of debt. Hence, Easterbrook (1984) noted that dividend payments and raising new debt and its contract negotiations would reduce potential for wealth transfer. The realization for potential agency costs linked with separation of management and shareholders is not new. Adam Smith (1937) proposed that management of earlier companies is wayward. This problem was highly witnessed during at the time of British East Indian Companies and tracking managers was a failure due to inefficiencies and high costs of shareholder monitoring (Kindleberger, 1984). Scott (1912) and Carlos (1922) differ with this view point. They agree that although some fraud existed in the corporations, many of the activities of the managers were in line with those of the shareholders interests. An opportune and intelligent manager should always invest the surplus cash available into those opportunities which are well researched to be in the best interest of the shareholders. Berle and Means (1932) was the first to discover the insufficient utilization of funds which are surplus after other investment opportunities taken by the management. This thought was further promoted by Jensens (1986) free cash flow hypothesis. This hypothesis combined market information asymmetries with the agency theory. The surplus funds left after all the valuable projects are largely responsible for creation of the conflict of interest between the management and the shareholders. Payment of dividends and interest on other debt instruments reduce the cash flow with the management to invest in marginal net present value projects and for other perquisite consumptions. Therefore, the dividend theory is better explained by the combination of both the agency and the signaling theory rather than by any o ne of these alone. On the other hand, the free cash flow hypothesis rationalizes the corporate takeover frenzy of the 1980s Myers (1987 and 1990) rather than providing a clear and comprehensive dividend policy. The study by Baker et al. (2007) reports, that firms paying dividend in Canada are significantly larger and more profitable, having greater cash flows, ownership structure and some growth opportunities. The cash flow hypothesis proposes that insiders to a firm have more information about future cash flow than the outsiders, and they have incentivized motives to leak this to outsiders. Lang and Litzenberger (1989) check the cash flow signaling and free cash flow explanations of the effect of dividend declarations on the stock prices. This difference between permanent and temporary changes is also explored in Brook, Charlton, and Hendershott (1998). However, this study is based on the hypothesis that dividend changes contain cash flow information rather than information about earnings. This is the cash flow signaling hypothesis proposing that dividend changes signal expected cash flows changes. The dividend decisions are affected by a number of factors; many researchers have contributed in determining which determinant of dividend payout is the most significant in contributing to dividend decisions. It is said that the primary indicator of the firms capacity to pay dividends has been Profits. According to Lintner (1956) the dividend payment pattern of a firm is influenced by the current year earnings and previous year dividends. Pruitt and Gitmans (1991) survey of financial managers of 1000 largest U.S companies about the interplay among the investment and dividend decisions in their firms reported that, current and past year profits are essential factors influencing dividend payments. The conclusion derived from Baker and Powells (2000) survey of NYSE-listed firms is that the major determinant is the anticipated level of future earnings and continuity of past dividends. The study of Aivazian, Booth, and Cleary (2003) concludes that profitability and return on equity positi vely correlate with the size of the dividend payout ratio. The study by Lv Chang-jiang and Wang Ke-min (1999) on 316 listed companies in China that paid cash dividends during 1997 and 1998 by using modified Lintner dividend model, suggested that the dividend payout ratio is due to the firms current earning level. Other researchers like Chen Guo-Hui and Zhao Chun-guang (2000), Liu Shu-lian and Hu Yan-hong (2003) also concluded their research on the above stated understanding about dividend policy of listed companies in China. A survey done by Baker, Farrelly, and Edelman (1985) and Farrelly, Baker, and Edelman (1986) on 562 New York Stock Exchange (NYSE) firms with normal kinds of dividend polices in 1983 suggested that the major determinants of dividend payments were the anticipated level of future earnings and the pattern of past dividends. DeAngelo et al. (2004) findings suggest that earnings do have some impact on dividend payment. He stated that the high/increasing dividend concentration may be the result of high/increasing earnings concentration. Goergen et al. (2005) study on 221 German firms shows that net earnings were the key determinants of dividend changes. Baker and Smith (2006) examined 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to understand how they set their dividend policies. Their study showed that for the matched firms, the pattern of past dividends and desire to maintain a long-term dividend payout ratio elicit the highest level of agreement from respondents. The study by Ferris et al. (2006) found mixed results for the relation between a firms earnings and its ability to pay dividends. Kao and Wu (1994) used a time series regression analysis of 454 firms over the period of 1965 to1986, and showed that there was a positive relationshi p between unexpected dividends and earnings. Carroll (1995) used quarterly data of 854 firms over the period of 1975 to 1984, and examined whether quarterly dividend changes predicted future earnings. He found a significant positive relationship. Liquidity is also an important determinant of dividend payouts. A poor liquidity position would generate fewer dividends due to shortage of cash. Alli et.al (1993), reveal that dividend payments depend more on cash flows, which reflect the companys ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. They claim current earnings do no really reflect the firms ability to pay dividends. A firm without the cash flow back up cannot choose to have a high dividend payout as it will ultimately have to either reduce its investment plans or turn to investors for additional debt. The study by Brook, Charlton and Hendershott (1998) states that, Firms expecting large permanent cash flow increases tend to increase their dividend. Managers do not increase dividends until they are positive that sufficient cash will flow in to pay them (Brealey-Myers-2002). Myers and Bacons (2001) study shows a negative relationship between the liquid ratio and dividend payout. For companies to enable them to enhance their dividend paying capacity, and thus, to generate higher dividend paying capacity, it is necessary to retain their earnings to finance investment in fixed assets. The study by Belans et al (2007) states that the relationship between the firms liquidity and dividend is positive which explains that firms with more market liquidity pay more dividends. Reddy (2006), Amidu and Abor (2006) find opposite evidence. Lintner (1956) posited that the level of retained earnings is a dividend decision by- product. Adaoglu (2000) study shows that the firms listed on Istanbul Stock Exchange follow unstable cash dividend policy and the main factor for determining the amount of dividend is earning of the firms. The same conclusion was drawn by Omet (2004) in case of firms listed on Amman Securities Market and he further states that the tax imposition on dividend does not have the significant impact on the dividend behavior of the listed firms. The study by Mick and Bacon (2003) concludes that future earnings are the most influential variable and that the past dividend patterns as well as current and expected levels are empirically relevant in explaining the dividend decision. Empirical support for Lintners findings, that dividends were indeed a function of current and past profit levels and were negatively correlated with the change in sales was found by Darling (1957), Fama and Babiak (1968). Benchman a nd Raaballe (2007) discovered that the propensity to pay out dividends is positively correlated to retained earnings. Also, the study by Denis and Osobov (2006) states that retained earnings are a significant dividend characteristic for non- US firms including UK, German, and French firms. One of the motives for dividend policy decision is maintaining a moderate share price as poor stock price performance mostly conveys negative information about firms reputation. An empirical research took by Zhao Chun-guang and Zhang Xue-li et al (2001) on all A shares listed companies listed in Shenzhen and Shanghai Stock Exchange, states that the more cash dividends is paid when the stock prices are high. Chen Guo-Hui and Zhao Chun-guang (2000) undertook a research on all A shares listed before 1996 and paid dividend into share capital in 1997 as their sampling, and employed single-factor analysis, multifactor regression analysis to analyze the data. Their research showed a positive stock price reaction to the cash dividend, stock dividend policy. Myers and Bacon (2001) discussed that the debt to equity ratio was positively correlated to the dividend yield. Therefore firms with relatively more investment opportunities would tend to be more geared and vice versa (Ross, 2000). The study by Hu and Liu, (2005) declares that there is a positive correlation between the cash dividend the companies pay and their current earnings, and a inverse relationship between the debt to total assets and dividends. Green et al. (1993) questioned the irrelevance argument and investigated the relationship between the dividends and investment and financing decisions. Their study showed that dividend payout levels are decided along with investment and financing decisions. The study results however do not support the views of Miller and Modigliani (1961). Partington (1983) declared that firms motives for paying dividends and extent to which dividends are decided are independent of investment policy. The study by Higgins (1981) declares a direct link between growths and financing needs, rapidly growing firms have external financing needs because working capital needs normally exceed the incremental cash flows from new sales. Higgins (1972) suggests that payout ratios are negatively related to firms need top fund finance growth opportunities. Other researchers like Rozeff (1982), Lloyd et al. (1985) and Collins et al. (1996) all show significantly negative relationship between historical sales growth and dividend payout whereas D, Souza (1999) however shows a positive but insignificant relationship in the case of growth and negative but insignificant relationship in case of market to book value. Jenson and Meckling (1976) find a strong relationship between dividends and investment opportunities. They explain, in some circumstances where firms have relative uptight disposable