The Effect of Recession on Dividend Policy Dissertation

The Effect of Recession on Dividend Policy - Dissertation Example Some of the logical explanations on how the various sectors were affected by the recession in terms dividend payout. Background Information The research covered various economic sectors of the economy namely; banking and financial Services, real estate companies, petrochemical companies, Agriculture and food industries, industrial investment and telecommunications. A total of 26 companies financial over a period of 5 years were thoroughly analyzed to come up with efficient analysis of our study topic. Difference in Dividend policy between different Economic Sectors We use the one way Anova to determine if there is a difference in mean between the average dividend pay for the various companies. The analysis generates the results table below. ANOVA Sum of Squares df Mean Square F Sig. Between Groups 96.613 7 13.802 2.162 .092 Within Groups 108.514 17 6.383 Total 205.127 24 As seen in the table above the value of significance from the table is .092 which is larger than the significance value of 0.05 hence we accept the null hypothesis which states that there is no statistically significant difference in the dividend policies adopted by the various sectors of the economy. Sectors from which various companies in the study. ... (2-tailed) .019 N 26 25 Eps Pearson Correlation .466(*) 1 Sig. (2-tailed) .019 N 25 25 Correlation is significant at the 0.05 level (2-tailed). The correlation coefficient is positive 0.466 which means a positive relationship between the two variables. At 95 percent level of confidence means that we reject ho hence conclude that there is a significant correlation between the capital structure and in particular the equity shareholding and the earnings related to them. Correlation between Capital Structure and Dividend Yield. The dividend yield is compared to the return on investment in our study as it is the annual dividend amount payout per share by a firm in relation to the share value. We measure the relationship between equity shareholding and the return on investment. We run the Pearson’s correlation coefficient from the variables dividend yield versus equity. The results of running leverage for the companies against the dividend yield give no significant correlation betwe en the two variables. Correlation: Capital Structure (Using shareholder Equity) and Dividend Policy Adoption (payout). We shall run the Pearson’s correlation to find out if there exists a linear relationship between the two variables. For the purpose f this test the null hypothesis is set as: There exists no significant correlation between the two variables. Running the data we generate the output below. Correlations Equity pre Equity Pearson Correlation 1 .187 Sig. (2-tailed) .370 N 26 25 Pre Pearson Correlation .187 1 Sig. (2-tailed) .370 N 25 25 From the table above it is clear that there a moderate relationship between the shareholders equity and the dividends paid out of the rather the dividend policies adopted by the various companies. Since the significance value from the table