Childhood Poverty - 3641 Words

RESEARCH/LITERATURE REVIEW OF ISSUES RELATED TO CHILDREN LIVING IN POVERTY _________________________________________________ A PAPER SUMBITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR FS 5833: FAMILY ECONOMICS IN THE DEPARTMENT OF FAMILY SCIENCES TEXAS WOMAN’S UNIVERSITY COLLEGE OF PROFESSIONAL EDUCATION BY SARAH KERAMATI ______________________________________________ DENTON, TEXAS APRIL 2012 Introduction Over the last few decades, the world has drastically changed, and the effect on the family dynamic has been profound. Today, there are more single parents, dual earner couples, and parents with more than one job living in both rural and urban areas in the United States than at any time in history†¦show more content†¦Such as, authoritarian approaches to classroom discipline, typically seen in poverty stricken areas, versus more positive, choice-based discipline more common in middle class communities. . Meeting the Basic Needs of Children in Poverty At-risk children face so many seemingly insurmountable obstacles. The children who are from economically distressed families have to live in conditions such as lack of food, dangerous neighborhoods, and small, crowded living spaces. This also affects their negative behavioral problems, their emotional well-being, as well as their social and educational well-being (Bullard, et al. 1997). They read less often, watch more television, have less access to computers or books, live in more dangerous neighborhoods, their parents are less likely to be involved in school activities, their houses are more crowded, and their nutrition is poorer (Grail, Halfon, Kandyce, amp; Russ, 2007). These students are more worried about their needs being met on a daily basis. The Maslow theory of development states that children react to their needs (Bilmes, 2004). If a child’s basic needs are not being met, then their mind focuses only on that need. For example, if a child is hungry, he/she may not want to play or learn. They may act out or get into trouble. They are not able to control their impulses and are driven by their needs being met (Weil, 2007). Bilmes’ (2004) six lifeShow MoreRelated Childhood Poverty Essay1574 Words   |  7 Pagesup from the lower class and the majority does not succeed. Childhood poverty is a large problem in the U.S. It is said that the poorest people in the United States are the children of the lower class. Childhood poverty could lead to a number of problems such as hunger, violence, physical and mental disabilities, educational problems, homelessness, family stress, sickness, and too-early parenthood. The sad truth is that living in poverty lowers a child’s chance to grow into a healthy, well-adjustedRead MoreThe Effects Of Poverty On Childhood Development924 Words   |  4 Pagesrelationship between poverty, lower socioeconomic status (SES), and childhood development. While poverty can be directly linked to negative developments in terms of health status it is also indirectly linked to other important factors such as; mental health, physiological wellbeing and education, all of which have major impacts on childhood development which can also be transferred into adulthood. This essay aims to evaluate the literature available on the effects of poverty on childhood development andRead MoreChildhood Po verty And Its Effects On Children And Families1513 Words   |  7 Pageslive in poverty or low-income families face many challenges. When a child is from a low-income family, you must know and understand the obstacles the child and their families may face. There are many ways living in poverty can affect children and families; educationally, physically, and emotionally, cognitively, and socially. There are resources available and beneficial information to encourage and benefit families who live in poverty or low-income families. Childhood poverty comes alongRead MoreIts Time To End Childhood Poverty Essay617 Words   |  3 Pagesof childhood poverty. It is truly a growing problem in the world, and after doing some research, I have realized exactly how severe the situation is. I initially got interested in this issue after participating in a â€Å"Habitat for Humanity† trip to an extremely impoverished part of Birmingham, Alabama. Seeing as how people didn’t have proper shelter, transportation, or food made me very worried, and since then, I have wanted to spread the word and bring people to action. The topic of childhood povertyRead MoreEffects Of Poverty On Middle Childhood Development1403 Words   |  6 PagesPoverty can have a strong influence on various kinds of development throughout middle childhood. It can alter socioemotional development, cognitive development, and physical health. (Evans, 2013). Parenting practices, neighborhoods, and overall environment play a significant role regar ding to the emotional and physical health during development in middle childhood. Disruption with physical and emotional health could potentially cause harm to the child. In this essay, I will explain how poverty affectsRead MoreIts Time To End Childhood Poverty Essay2130 Words   |  9 Pages Poverty is defined in many ways. The dictionary definition simply does not suffice to show the human cost of poverty. Poverty is much more than the limited capital resources that this definition suggests. Poverty is defined by the federal government as 16,660 for a family of four in 1998 (â€Å"Child Poverty in the United States† 2000). These figures are tremendously flawed; a single individual residing in the United States would not fare well by the standards of most individuals at this income levelRead MoreChildhood Obesity And High Poverty Neighborhoods Essay2187 Words   |  9 PagesChildhood Obesity in High-Poverty Neighborhoods Over the last thirty years, there has been an increase in the widespread presence of childhood obesity, as reported by the American Obesity Association (AOA) in Eliadis’ (2006) commentary article. According to the Centers for Disease Control and Prevention (CDC), childhood obesity â€Å"is now considered the number one nutritional public health concern of children and adolescents in the United States† (Sealy, Y., Farmer, G., 2011). Individuals livingRead MoreThe Effects Of Childhood Poverty On The Community And Society Essay2484 Words   |  10 Pages This paper will be introducing and discussing child poverty. The focus will be on the ongoing problem of child poverty within developed countries and the negative consequence of child poverty including its impacts on economic and social chances for those in poverty. I will be seeking to determine the negative effects of childhood poverty on the individual, whether that be an immediate effect, a lasting long-ter m effect, or something that does not show up until later on in life. Secondly IRead MoreThe Impact Of Poverty On Children s Development And Early Childhood Programs2790 Words   |  12 PagesANALYSIS OF ARTICLES RELATED TO: The impact of poverty on children’s development and early childhood programs A literature review submitted in partial fulfillment of the requirements of the course SPS6805 To Dr. Phil Lazarus by Jessica R. Rothman Fall 2014 The purpose of this literature review was to review articles examining the influence poverty may or may not have on young children. Additionally, after determining risks children living in poverty face, a review of literature studying earlyRead MoreObesity : Childhood Hunger And Poverty1146 Words   |  5 PagesObesity Caused by Childhood Hunger and Poverty America is a wealthy nation, yet 10.6% of households with children (4.2 million) suffer from food insecurity [1]. Low-income households are also much more likely than others to suffer from childhood hunger, caused by a recurrent or involuntary lack of food. The USDA defines food insecurity as â€Å"limited or uncertain availability of nutritionally adequate and safe foods or limited or uncertain ability to acquire acceptable foods in socially acceptable ways†

Comment On The Juvenile Justice System - 943 Words

Comment on the increased punitiveness in juvenile justice. When is it appropriate to have cases involving murder or rape be heard in juvenile courts, and when should they be heard in adult court? Please be specific. It has been understood by society that juveniles have been committing more serious crimes while the juvenile justice system had also become lenient with juvenile offenders. They were only getting a ‘slap on the risk’ as some members of society interpreted it, by the juvenile justice. This therefore led to a massive response from many state legislators who decided to enforced punitive laws to control juvenile serious crimes (Witehead Lab, 2015) These laws have been enforced to prevent future juvenile offenders from committing serious crimes. Additionally some of the punitive laws which were implemented enable juvenile offenders who have committed serious crimes to be removed from the juvenile justice system to the adult justice system. Some also suggested that the justice system is to treat juveniles who have committed serious crimes as criminals within their jurisdiction in the juvenile courts. This they suggested will be as an example to other juveniles who intended to commit serious in the future to be treated as criminals and in some states prosecutors can file some cases directly in the criminal court than in the juvenile court (Lawrence Hesse, 2009 Pg. 21). In regards to cases of rape and murder, as a researcher I hold to the opinion that the parents andShow MoreRelatedThe Canadian Juvenile Justice System Essay1171 Words   |  5 PagesYouth and juvenile crime is a common and serious issue in current society, and people, especially parents and educators, are pretty worried about the trend of this problem. According to Bala and Roberts, around 17% of criminals were youths, compared to 8% of Canadian population ranging between 12 to 18 years of age between 2003 and 2004 (2006, p37). As a big federal country, Canada has taken a series of actions since 1908. So far, there are three justice acts in the history of Canadian juvenile justiceRead MoreThe Frontline Episode : When Kids Get Life923 Words   |  4 PagesThe Frontline episode â€Å"When Kids Get Life† serves as a reminder for how the criminal justice system sometimes drops the proverbial ball when it comes to juveniles. Time after time, situations arise and are brought to the attention of the Department of Social Services. Whether they are overlooked or lost somehow, they are deprived of the help they need. The system fails children who are crying for help, and the results are sometimes fatal. Circumstances lead to the loss of life, not only for theRead MoreThe Origins Of Juvenile Justice1385 Words   |  6 Pagesthe origins of juvenile justice, from the house of refuge to the juvenile programs of today. Ans: In the early nineteenth century, the idea of reforming youth offenders took root in the United States. The House of Refuge in New York, which opened in 1824, was the first juvenile house of reform in the United States. This was the first attempt to house juvenile offenders in a separate facility and other States, like Maryland, would soon follow suit. The idea was not to punish juveniles offenders as adultsRead MoreEntry Into The Court System, By Craig Hemmens, Benjamin Steiner, And David Mueller1726 Words   |  7 PagesThe reading I chose to reflect on was chapter three,† Entry into the Court System† from the book â€Å"Criminal Justice Case Briefs, Significant Cases in Juvenile Justice† by Craig Hemmens, Benjamin Steiner, and David Mueller. I chose to write about the process of the pretrial or â€Å"intake† phase because it has not been determined by the Supreme Court as critical in juvenile proceedings. Consequently juveniles do not have the right to be represented by counsel during this meeting and if they chose toRead MoreJuvenile Delinquency Week 8 Jose1344 Words   |  6 PagesThis term paper looks at an account involving a juvenile delinquent Josà © and juvenile delinquents in broad and those in disagreement with the rule and the law in particular. It scrutinizes the status or condition of the American juvenile justice arrangement or system and tries to explore the motive or the grounds behind children finally resorting to delinquent vices in concurrence with the offences they usually engage in are indicted of committing. Even as the study investigates both social and culturalRead MoreJuveniles Getting Adult Jail Sentences: A Persuasive Essay1526 Words   |  6 PagesJuveniles getting Adult Jail Sentence s Should juveniles get adult jail sentences? In todays society juvenile offenders are facing the law to full force, in two court systems. Not only are they tried in the juvenile justice system, but also charged as adults. The issue of charging juveniles as adults has stirred various views owing to the violent crimes committed by the young offenders. Politicians comment that the best solution is to lock up juvenile offenders for a long time and ignore rehabilitationRead More Juveniles Essay1263 Words   |  6 Pages As I entered the juvenile detention facility on 150th, I began to wonder about the female detainee I was going to interview regarding placement. I am sitting in a locked room with a desk, two (2) chairs and a large plexie glass window. As the staff arrived she was accompanied with Farouka (the name has been changed to protect confidentiality). Farouka is a 14-year-old Caucasian/Hispanic female small in stature, wearing county quot;bluesquot; (issued clothing). She appeared fearful and teary eyedRead MoreThank You At Kingston University893 Words   |  4 Pagesmannered, disciplined, law abiding and somewhat different from today’s youth. However, Humphries, (1994: 21) (cited at London Gangs† 2008) disputed this position, acknowledging that there is nothing new about gangs and street violence, and in reality juvenile crime is deeply rooted in our past. Regardless of whether gangs and guns are historic or a new phenomenon recently a series of tragic and high-profile shootings has raised the issue of gang and gang membership in both the public consciousness andRead MoreDepartment Of Juvenile Justice System Essay2336 Words   |  10 PagesDepartment of Juvenile Justice Organization description Florida Legislatures created the Florida Department of Juvenile Justice in 1994 to serve as the state agency responsible for youth involved in the juvenile justice system. Although the state agency is under the authority of the state governor, Secretary Christina Daly, who provides leadership for the organization, each circuit has a leadership team who runs the daily operation of each sub-department. The Department’s headquarterRead MoreJuvenile Justice System : Past, Present, And Future2137 Words   |  9 PagesJuvenile Justice System; Past, Present, and Future The juvenile system in the United States has a long history but varies from state to state. â€Å"It started around 170 years ago, with the opening of Massachusetts’ Lyman School for Boys in 1846 (Miller, 1991), American reformers began experimenting with a â€Å"new† approach to troubled youth† according to Patrick McCarthy author of the article â€Å"The Future of Youth Justice: A Community-Based Alternative to the Youth Prison Model†. The juvenile justice system

Mecca Silk Conditioner a Research Paper Free Essays

Abstract Generally, the study wanted to make a homemade conditioner from eggyolk, flour, malunggay oil extract, cucumber juice and calamansi juice and Shall be called â€Å" MECCA Silk Conditioner. † Specifically, it tries to find out if oregano leaves eggyolk, flour, malunggay oil extract, cucumber juice and calamansi juice be made into a conditioner. Among the treatments, which one are the best proportion for the homemade conditioner and if there is a difference between the newly produced MECCA Silk Conditioner and the commercial one in terms of smell, appearance and shining effect. We will write a custom essay sample on Mecca Silk Conditioner a Research Paper or any similar topic only for you Order Now The materials were gathered and prepared. Cucumber was peeled, cut and pounded to get its 20 ml. juice. Calamansi fruit was also cut and squeezed to extract the 20 ml. juice. Twenty ml. detergents were measured. Three grams of Malunggay Leaves was boiled in 50 ml. vegetable oil. The beaker was covered and removed only when boiling starts. It was boiled for 3 minutes. It was then cooled for 5 minutes and strained in clean containers. Thirty ml. water was poured in a 100 ml. flour and stirred until well- blended. Two medium-sized egg yolk were beaten until sticky. Measured Malunggay oil, detergents, cucumber and calamansi juice were added little by little and stirred continuously. The mixture was added to the flour and mixed thoroughly until it looks whipped. Poured in a clean container, label its name, use and expiry date. The contents of the chosen ingredients which are carefully studied by the researchers and the positive effects to the respondents made the newly produced product to be an alternative conditioner for the commercial one. Aside from the availability of materials in the environment, it is also easy to prepare. Treatment B, came out to the best proportion for the produced deodorant as a result of the series of experimentation and through the application and evaluation of the five respondents. MECCA Silk Conditioner appeared to have shining effect, smooth and manageable in appearance . It last for a day therefore it is acceptable and comparable to the commercial one. IV. Research Plan a) Materials and Methods How to cite Mecca Silk Conditioner a Research Paper, Essays

Dividend Policy Trends free essay sample

Dividend Policy of Indian Corporate Firms: An Analysis of Trends and Determinants Dr. Y. Subba Reddy1 The present study examines the dividend behavior of Indian corporate firms over the period 1990 – 2001 and attempts to explain the observed behavior with the help of trade-off theory, and signaling hypothesis. Analysis of dividend trends for a large sample of stocks traded on the NSE and BSE indicate that the percentage of companies paying dividends has declined from 60. 5 percent in 1990 to 32. percent in 2001 and that only a few firms have consistently paid the same levels of dividends. Further, dividend-paying companies are more profitable, large in size and growth doesn’t seem to deter Indian firms from paying higher dividends. Analysis of influence of changes in tax regime on dividend behavior shows that the tradeoff or tax-preference theory does not appear to hold true in the Indian context. Test of signaling hypothesis reinforces the earlier findings that dividen d omissions have information content about future earnings. However, analysis of other non-extreme dividend events such as dividend reductions and non-reductions shows that current losses are an important determinant of dividend reductions for firms with established track record and that the incidence of dividend reduction is much more severe in the case of Indian firms compared to that of firms traded on the NYSE. Further, dividend changes appear to signal contemporaneous and lagged earnings performance rather than the future earnings performance. 1 Asst. Professor, Institute for Financial Management and Research (IFMR), Chennai. resume writing service fees The views expressed and the approach suggested are of the authors and not necessarily of NSE. 1. Introduction From the practitioners’ viewpoint, dividend policy1 of a firm has implications for investors, managers and lenders and other stakeholders. For investors, dividends – whether declared today or accumulated and provided at a later date are not only a means of regular income2, but also an important input in valuation of a firm3. Similarly, managers’ flexibility to invest in projects is also dependent on the amount of dividend that they can ffer to shareholders as more dividends may mean fewer funds available for investment. Lenders may also have interest in the amount of dividend a firm declares, as more the dividend paid less would be the amount available for servicing and redemption of their claims. However, in a perfect world as Modigliani and Miller (1961) have shown, investors may be indifferent about the amount of dividend as it has no influence on the value of a firm. Any investor can create a ‘home made dividend’ if required or can invest the proceeds of a dividend payment in additional shares as and when a company makes dividend payment. Similarly, managers may be indifferent as funds would be available or could be raised with out any flotation costs for all positive net present value projects. But in reality, dividends may matter, particularly in the context of differential tax treatment of dividends and capital gains. Very often dividends are taxed at a higher rate compared to capital gains. This implies that dividends may have negative consequences for investors4. Similarly, cost of raising funds is not insignificant and may well lead to lower payout, particularly when positive net present value projects are available. Apart from flotation costs, information asymmetry between managers and outside investors may also have implications for dividend policy. According to Myers and Majluf (1984), in the presence of information asymmetry and flotation costs, investment decisions made by managers are subject to the pecking order of financing choices available. Managers prefer retained earnings to debt and debt to equity flotation to finance the available projects. Information asymmetry between agents (managers) and principals (outside shareholders) may also lead to agency cost (Jensen and Meckling, 1976). One of the mechanisms o reducing expropriation of outside f shareholders by agents is high payout. High payout will result in reduction of free cash flow available to managers and this restricts the empire building efforts of managers. The presence of information asymmetry may a mean that managers need to signal their ability to lso generate higher earnings in future with the help of high dividend payouts (Bhattacharya, 1979, John and Williams 1985, and Miller and Rock, 1985). However, the credibility of signals depends on the cost of signaling – the cost being loss of financial flexibility. High payout results in reduction of free cash flow when in fact the firm needs more funds to pursue high growth opportunities. Rozeff (1994) models payout ratios as a function of three factors: flotation costs of external funding, agency cost of outside ownership and financing constraints as a result of higher operating and financial leverage5. To summarize, several theories have been proposed in explaining why companies pay dividends6. While many earlier studies point out the tax-preference theory, more recent studies emphasize signaling and agency cost rationale of dividend payments. However, the dividend puzzle is yet unresolved and the words of Brealey (1992) poses the dividend policy decision as â€Å"What is the effect of a change in cash dividends, given the firm’s capital-budgeting and borrowing decisions? † In other words, he looks at dividend policy in isolation and not as a by-product of other corporate financial decisions. 2 Lintner (1956) finds that firms pay regular and predictable dividends to investors, where as the earnings of corporate firms could be erratic. This implies that shareholders prefer smoothened dividend income. Bernstein (1998) observes that given the ‘concocted’ earnings estimates provided by firms, the low dividend payout induces reinvestment risk and earnings risk for the investors. 4 Black (1976) notes that in the presence of taxes, investors â€Å"prefer smaller dividends or no dividends at all†. 5 According to Kalay (1982), in the absence of restraining covenants, shareholders can transfer wealt h from bondholders by paying off dividend to themselves either by selling existing assets or by reducing investment or by using proceeds of a senior debt. 6 Baker, Powell and Veit (2002) survey different streams of research work on dividends. 2 Fischer Black (Black 1976) may well apply in today’s context: â€Å"The harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don’t fit together†. One of the striking aspects that have been noticed in recent periods is the lower dividend paid by corporate firms in the US. Fama and French (2001) analyze the issue of lower dividends paid by corporate firms over the period 1973-1999 and the factors responsible for such a decline. They attribute the decline to changing firm characteristics of size, earnings and growth. However, it is to be seen whether the change owards lower dividends is a permanent feature or will there be reversal. A decline in dividends, according to Fama and Frenc h, could be due to lower transaction costs, improved corporate governance mechanisms, and the increasing preference towards capital gains. 1. 1 Indian Scenario In the Indian context, a few studies have analyzed the dividend behavior of corporate firms. Mahapatra and Sahu (1993) find cash flow as a major determinant of dividend followed by net earnings. Bhat and Pandey (1994) undertake a survey of managers’ perceptions of dividend decision and find that managers perceive current earnings as the most significant factor. Narasimhan and Asha (1997) observe that the uniform tax rate of 10 percent on dividend as proposed by the Indian union budget 1997-98, alters the demand of investors in favor of high payouts. Mohanty (1999) finds that firms, which issued bonus shares, have either maintained the pre-bonus level or only decreased it marginally there by increasing the payout to shareholders. Narasimhan and Vijayalakshmi (2002) analyze the influence of ownership structure on dividend payout and find no influence of insider ownership on dividend behavior of firms. However, it is still not clear as to what is the dividend payment pattern of firms in India and why do they initiate and omit dividend payments or reduce or increase dividend payments. Hence it is proposed to analyze the dividend payout of firms in India and analyze the dividend initiations and omissions and other changes in dividends and the signals that these events convey. Following Fama and French (2001), the present study also attempts to analyze the impact of profitability, size and growth on the dividend payout of firms. Similarly, following Healy and Palepu (1988) an attempt is made to analyze the signaling hypothesis, i. e. arnings information conveyed by dividend initiations and omissions. Since, initiations and omissions construe extreme dividend events, changes in dividends i. e. , increases and decreases and the information that they convey is also examined following DeAngelo, DeAngelo and Skinner (1992). There have been several changes in the tax regime in the last few years. The union budget 1997-98 made dividends taxable at t e hands of company paying them and not in the hands of investors receiving them. h Similarly there have been changes in the capital gains tax and exemption of dividend income under Section 80 L of the Income Tax Act 1961. All these changes have implications for the dividend policy of corporate firms. According to tax-preference or trade-off theory, favorable dividends tax should lead to higher payouts. Hence it is proposed to analyze the impact of tax regimes on dividend policies of corporate firms. 1. 2 Objectives 1. To study the trends in the dividend payment pattern of Indian corporate firms; 2. To analyze the impact of changes in dividend tax on the propensity to pay dividends; 3. To analyze the influence of firm characteristics such as profitability, growth and size on the dividend payment pattern; 4. To analyze the signaling hypothesis, specifically earnings information conveyed by dividend initiations and omissions; and 5. To analyze the influence of loss on dividend reductions. 3 In other words, the present study focuses on an analysis of dividend trends and attempts to analyze the determinants of these trends with the help of trade-off or tax-preference theory and signaling hypothesis. There are other important determinants of dividend behavior such as transactions costs, which we will not analyze, in the present study. In the next Section, we review the relevant literature, followed by a description of the database employed and methodology adopted in Section 3. Dividend trends are discussed in Section 4, and the analysis of characteristics of dividend payers is presented in Section 5. Sections 6 and 7 deal with the signaling hypothesis: first the case of dividend initiations and omissions and second dividend reductions. Section 8 summarizes the finding of study, points out limitations and concludes with directions for further research. 2. Review of Relevant Literature DeAngelo, DeAngelo and Skinner (1992) analyses the relationship between dividends and losses and the information conveyed by dividend changes about the earnings performance. They examine the dividend behaviour of 167 NYSE firms with at least one annual loss during 1980-95 and those of 440 firms with no losses during the same period, where all the firms had a consistent track record of ten or more years of positive earnings and dividends. They find that 50. 9% of 167 firms with at least one loss during 1980-95 reduced dividends, compared to 1% of 440 firms without losses. Their findings support signaling hypothesis in that dividend changes improve the ability to predict future earnings performance. Glen et al. (1995) study the dividend policy of firms in emerging markets. They find that firms in these markets have a target dividend payout rate, but less concerned with volatility in dividends over time. They also find that shareholders and governments exert a great deal of influence on dividend policy and observe that dividends have little signaling content in these markets. Benartzi, Michaely, Thaler (1997) analyzes the issue of whether dividend changes signal the future or the past. For a sample of 7186 dividend announcements made by NYSE or AMEX firms during the period 1979-91, they find a lagged and contemporaneous relation between dividend changes and earnings. Their analysis also shows that in the two years following dividend increases, earnings changes are unrelated to the sign and magnitude of dividend changes. Bernsterin (1998) expresses concern over the decline in payout over a period of time in the US market. He observes that given the ‘concocted’ earnings estimates provided by firms, the low dividend payout induces reinvestment risk and earnings risk for the investors. He asserts that â€Å"†¦ try calculating the historical correlation between payout ratios in year t and earnings growth over t + 5. The correlation coefficient is positive and statistically significant† 7. Fama and French (2001) analyze the issue of lower dividends paid by corporate firms over the period 1973-1999 and the factors responsible for the decline. In particular they analyze whether the lower dividends were the effect of changing firm characteristics or lower propensity to pay on the part of firms. They observe that proportion of companies paying dividend has dropped from a peak of 66. 5 percent in 1978 to 20. 8 percent in 1999. They attribute this decline to the changing characteristics of firms: â€Å"The decline in the incidence of dividend payers is in part due to an increasing tilt of publicly traded firms toward the characteristics – small size, low earnings, and high growth – of firms that typically have never paid dividends†8. Baker, Veit and Powell (2001) study the factors that have a bearing on dividend policy decisions of corporate firms traded on the Nasdaq. The tudy, based on a sample survey (1999) response of 188 firms out of a total of 630 firms that paid dividends in each quarter of calendar years 1996 and 1997, finds that the following four factors have a significant impact on the dividend decision: pattern of past dividends, stability 7 8 Bernstein (1998), pp. 1. Fama and French (2001), p. 79 4 of earnings, and the level of current and fut ure expected earnings. The study also finds statistically significant differences in the importance that managers attach to dividend policy in different industries such as financial versus non-financial firms. Ramacharran (2001) analyzes the variation in dividend yield for 21 emerging markets (including India) for the period 1992-99. His macroeconomic approach using country risk data finds evidence for pecking order hypothesis – lower dividends are paid when higher growth is expected. The study also finds that political risk factors have no significant impact on dividend payments of firms in emerging markets. Lee and Ryan (2002) analyze the dividend signaling-hypothesis and the issue of direction of causality between earnings and dividends whether earnings cause dividends or vice versa. For a sample of 133 dividend initiations and 165 dividend omissions, they find that dividend payment is influenced by recent performance of earnings, and free cash flows. They also find evidence of positive (negative) earnings growth preceding dividend initiations (omissions). 2. 1 Previous Indian Studies Kevin (1992) analyzes the dividend distribution pattern of 650 non-financial companies which closed their accounts between September 1983 and August 1984 and net sales income of one crore rupees or more. He finds evidence for a sticky dividend policy and concludes that a change in profitability is of minor importance. Mahapatra and Sahu (1993) analyze the determinants of dividend policy using the models developed by Lintner (1956), Darling (1957) and Brittain (1966) for a sample of 90 companies for the period 1977-78 – 1988-89. They find that cash flow is a major determinant of dividend followed by net earnings. Further, their analysis shows that past dividend and not past earnings is a significant factor in influencing the dividend decision of firms. Bhat and Pandey (1994) study the managers’ perceptions of dividend decision for a sample of 425 Indian companies for the period 1986-87 to 1990-91. They find that on an average profit-making Indian companies have distributed about one-third of their net earnings and that the average dividend payout ratio is 43. 6 percent. They also find that the average dividend payout ratio is 54 percent for the sample of both profitmaking and loss-making companies and the average dividend rate is in the range of 14. 3 percent to 19. 2 percent. They also observe variation in dividend policy of different industries. Further, a survey of these 425 companies has been attempted. How ever, only 31 questionnaires have been received and of these they find 28 amenable for further analysis. Their analysis of the respondents shows that managers perceive current earnings as the most significant factor influencing their dividend decision followed by patterns of past dividends. They also find two other variables increasing equity base and expected future earnings to have significant influence. However, they find industry to have the least influence on the dividend, which has been contrary to the expectations. Mishra and Narender (1996) analyze the dividend policies of 39 state-owned enterprises (SoE) in India for the period 1984-85 to 1993-94. The find that earnings per share (EPS) is a major factor in determining the dividend payout of SoEs. Narasimhan and Asha (1997) discuss the impact of dividend tax on dividend policy of firms. They observe that the uniform tax rate of 10 percent on dividend as proposed by the Indian union budget 1997-98, alters the demand of investors in favor of high payouts rather than low payouts as the capital gains are taxed at 20 percent in the said period. Mohanty (1999) analyzes the dividend behavior of more than 200 firms for a period of over 15 years. He finds that in most bonus issue cases firms have either maintained the pre-bonus level or only decreased it marginally there by increasing the payout to shareholders. The study also finds that firms that declared bonus during 1982-1991 showed higher returns to their shareholders compared to firms which did not issue bonus shares but maintained a steady dividend growth. He finds evidence for a reversal of this trend in the 1992- 5 1996 period. He attributes such a reversal in trend to the changed strategy of multi-national corporations (MNCs) and their reluctance to issue bonus shares. Narasimhan and Vijayalakshmi (2002) analyze the influence of ownership structure on dividend payout of 186 manufacturing firms. Regression analysis shows that promoters’ holding as of September 2001 has no influence on average dividend payout for the period 1997-2001. 3. Database and Methodology 3. 1 Database Dividend payment pattern of all companies that are listed for trading on one of the two major exchanges namely National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) during the period 1989-1990 to 2000-2001 (we refer each year henceforth with the end year i. e. for 2000-2001 to 2001) are employed for analysis. The data has been sourced from Prowess database of the Centre for Monitoring Indian Economy (CMIE). For the purpose of this study, only final cash dividends are considered and stock repurchases and stock dividends are not considered. Unlike the firms in developed countries that pay quarterly dividends, Indian companies typically pay only one dividend during a year. A few firms do pay interim dividends, however, data regarding these are not readily accessible and it is extremely difficult to get such data for a reasonable number of years. Further, stock repurchases have been permitted only recently and only about a hundred companies have bought back their stocks so far. Hence, in the present study stock repurchases are not considered for analysis. Stock price data for the prior year of dividend announcement are also taken from the Prowess database. 3. 2 Methodology for Analysis of Trends To analyze the trends in dividend payment pattern, number of companies paying dividend as percentage of total firms, average dividend paid, dividend per share, payout ratio, and dividend yield are computed for the period 1990 to 2001. Dividend per share (DPS) is calculated as DPS j ,t = Dividend j ,t EQCap j ,t Where, DPSj,t refers to dividend per share for company j in year t; Dividend j,t refers to amount of dividend paid by company j in year t; and EQCap j,t refers to paid -up equity capital for firm j in year t. Equity capital is employed instead of the usual number of outstanding shares in the denominator as it facilitates comparison of rupee dividend paid per share by removing the impact of different face or par values. Dividend payout ratio (PR) is computed as PR jt = Dividend j , t PAT j ,t Where, PR j,t is dividend payout ratio, Dividend j,t refers to amount of dividend paid by company j in year t; and PATj,t refers to net profit or profit after tax for firm j in year t. Dividend Yield (DY) is computed as 6 DY jt = DPS j ,t Price j ,t ? 1 t Where, DYjt refers to dividend yield for firm j in year t, DPSjt refers to dividend per share for firm j in year , and Pricej,t-1 is closing price of previous year for firm j. Further, the entire sample is categorized into payers and non-payers to examine the trends in dividends across different subgroups. Payers are those firms that have paid dividend in the current year, where as nonpayers have not paid dividend in the current year. Payers are further classified into regular payers, initiators and current payers. Regular payers are those firms that have paid dividend regularly without ever skipping the payments. Initiators on the other hand refers to those firms with a maiden dividend, where as current payers are those firms who are neither regular payers nor initiators. Non-payers are further categorized into never paid, former payers and current non-payers. Never paid firms are those that have never paid even a single dividend, where as former payers are those firms which at some previous point had paid dividends. Current non-payers are those firms which are recently listed and that they are neither former-payers nor are in the never paid category in any of the previous years. 3. 3 Influence of Tax Regime Change: Test of Trade-off Theory Paired samples t-test has been employed to analyze the influence of changes in dividend tax during 199798 on the dividend propensity of Indian corporate firms. According to the tradeoff theory, corporate firms pay more dividends when the dividend tax is low compared to that of capital gains tax. The tax regime ushered in during 1997-98, whereby dividends are taxed at source at a uniform rate of 10%, has tilted the balance in favor of dividends. Changes in dividends are captured with the help of two measures – dividend per share and dividend payout percentage. For this purpose total dividend per share and average dividend payout percentage during the previous tax regime, i. e. the incidence of dividend tax is on the investors are compared with that of changed tax regime where dividend taxes are payable by corporate firms at a flat rate of 10%. The period 1994-95 to 1996-97 constitutes the first sub-period and the period 1998-99 to 2000-01 constitutes the second period. The following hypotheses are tested using paired samples t-test: (i) Null hypothesis of no differences between the total dividend per share between the two periods; and (ii) Null hypothesis of no difference between the average percentage payout between the two periods. Further, changes in the propensity of regular payers and changes in the payment pattern between 1996-97 and 1998-99 as a result of change in tax regime are also tested. 3. 4 Characteristics of Payers and Non-Payers Consistent with Fama and French, logit regression coefficients are estimated to analyze the influence of firm characteristics on the dividend payment pattern, for each year t during 1990-2001. The dependent variable assumes a value of 0 when the firm pays no dividend and assumes a value of 1 when pays a dividend. The explanatory variables are: Et/At is profitability measured as the ratio of aggregate earnings before interest to aggregate assets; dAt/At, is growth rate of assets; Vt/At is market-to-book ratio i. e. , the ratio of the aggregate market value to the aggregate book value of assets; and the NSEPt is the percent of firms with the same or lower market capitalization. Coefficients are computed for each of the year 7 and the aggregate coefficients and associated t values are analyzed to infer the influence o profitability, f growth and size. 3. Test of Signalling Hypothesis: Case of Dividend Initiations and Omissions For this part of the analysis, a firm is classified as initiator if it has paid dividend in the current year but has not paid dividends for the preceding 3 years. Similarly a firm is categorized as omission firm, if the firm has not currently paid dividend but has paid dividend in the preceding three years. To analyze signaling hypothesis, consistent with Healey and Palepu , earnings patterns of firms initiating and omitting dividend for 3 years before the year of event and 3 years after event are examined. To aggregate results across firms, earnings changes in these years are expressed as a percentage of the previous year’s closing stock price, PJ. The standardized change in earnings for firm j in year t, is defines as ? E j ,t = E j ,t ? E j ,t ? 1 Pj Where Ej,t are earnings per share before extraordinary items and discontinued operations9 for firm j in year t. The null hypotheses of average earnings changes are zero is tested with the help of Dunnett’s C (Post Hoc) test. Analysis pertaining to initiations and omissions only cover a particular sample of extreme events and excludes firms not having a dividend track record of less than 3 years. In order to cover other dividend events like dividend reductions and increases in the following we arrive at yet another sample. 3. 6 Test of Signaling Hypothesis: Case of Dividend Reductions To analyze the relationship between dividends and losses a sample is drawn with firms having consistent profitability and dividend track records during 1990 – 1995 and who have earnings and dividend information for the period 1996 – 2001. The importance of annual losses on dividend reductions and annual dividend omissions has been analyzed with the help of logit analysis. The dependent variable equals zero if a firm has maintained or increased its dividend per share and is equal to one if the firm announced a reduction in dividend per share. The loss dummy assumes a value of one if the firm reports a loss for the year under study and zero otherwise. The level of net income and changes in net income are standardized with the previous year’s net worth for each firm. For firms in loss sample, the initial loss year constitutes the event year where as for non-loss firms, the initial year of earnings decline constitutes the event year. Similarly to examine the influence of past and future levels of earnings logit analysis has been employed on the subset for event years 1997 and 1998. The dependent variable equals zero if a firm has maintained or increased its dividend per share and is equal to one if the firm announced a reduction in dividend per share. The explanatory variables are earnings in 1 year before the event (t-1), 2 years preceding the event (t-2), current earnings (t), earnings in the year following the event year (t+1), earnings in 2 years following the event (t+2). Similarly, mean difference in earnings over t 2 through t+2 years is also examined with the help of Dunnett’s C test. This analysis would be useful in determining whether dividend changes are impacted by contemporaneous or lagged or expected earnings performance. 9 In the Indian context an approximate value for this is derived from ‘other income’. 8 4. Trends in Dividends and Influence of Changes in Tax Regime Average profit after tax (PAT) has increased from Rs. 4. 68 crore in 1990 to Rs. 6. 11 crore in 2000 and Rs. 9. 36 crore in 2001 (Table 4. 1). However, there have been several fluctuations in average PAT reflecting the changes in Indian economy. In the early phases of economic reform, many firms had to restructure as the economy was opened up and structural adjustments were undertaken resulting in a reduction in PAT. The subsequent pick up in the mid -90s has seen an increase in average PAT. The late 1990s, which marked a significant decline in economic activity, have had their impact on PAT of firms. 4. 1 Average Dividend Paid Despite fluctuations in PAT, the average aggregate dividend payments have steadily increased from Rs. . 99 crore in 1990 to Rs. 2. 93 crore in 2000 and Rs. 4. 19 crore in 2001. Further, compared to PAT the dividend payments have exhibited a smooth trend implying that dividend smoothening is occurring in the Indian context (Figure 4. 1). Table 4. 1 Trend in Dividends and PAT During 1990-2001 Year Number of Firms 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Common Firms 1707 2184 2505 30 97 4020 5115 5600 5855 5980 6248 6225 4766 871 Average Dividend Rs. Crore 0. 99 0. 98 1. 11 1. 11 1. 27 1. 56 1. 85 2. 05 2. 26 2. 9 2. 93 4. 19 SD of Average SD of Dividend PAT PAT Rs. Crore Rs. Crore Rs. Crore 3. 92 4. 68 48. 45 3. 79 4. 05 37. 88 4. 54 4. 19 40. 45 4. 85 3. 06 46. 76 6. 19 4. 15 51. 41 8. 42 6. 96 57. 55 10. 80 7. 19 62. 92 13. 91 6. 38 65. 65 17. 18 5. 69 103. 52 22. 14 5. 09 88. 19 26. 46 6. 11 103. 54 44. 71 9. 36 134. 39 Number of firms paid dividend during the study period have shown an up trend till 1995 and have fallen subsequently (Appendix Figure 4. 1), where as the percentage of companies paying dividends has declined from 60. percent in 1990 to 32. 1 percent in 2001 (Table 4. 2 and Figure 4. 2). This is consistent with the trend observed in the US market (Fama and French 2001). The fact that percentage of companies paying dividends have declined whereas the average dividend paid has increased implies tha t companies which have been paying dividend have paid higher amounts in recent years. Total non-payers have steadily increased from 1990 to 2000 before declining slightly in 2001 (Appendix Table A4. 1 and Figures A4. 2 and A4. 3). Firms, which have never paid dividend, constituted a significant proportion through out the sample period – constituting more than 50% from 1991 to 2001 continuously. The number of firms, which at some previous time paid dividend, have increased overtime and reached almost 50% of non-payers in 2001. Figure 4. 1 9 Trend in Average Dividends, and PAT During 1990-2001 Average Dividend Average PAT 10 9 8 7 6 5 4 3 2 1 0 1990 1992 1994 1996 1998 2000 Rs. Crores Year Table 4. 2 Trend in Dividend Payments During 1990-2001 Year Paid Dividend No. 033 1272 1533 1823 2333 2775 2723 2386 2101 2007 1988 1531 % 60. 50 58. 20 61. 20 58. 90 58. 00 54. 30 48. 60 40. 80 35. 10 32. 10 31. 90 32. 10 Not Paid Dividend No. 674 912 972 1274 1687 2340 2877 3469 3879 4241 4237 3235 % 39. 50 41. 80 38. 80 41. 10 42. 00 45. 70 51. 40 59. 20 64. 90 67. 90 68. 10 67. 90 Total Number of Firms 1707 2184 2505 3097 4020 5115 5600 5855 5980 6248 6225 4766 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Total number of firms paying dividend has increased up to 1995 and has registered sustained decline there after (Table 4. , Appendix Figures A4. 4 and A4. 5). Mirroring these trends firms, which have paid dividends regularly, peaked in 1995 and recorded declines thereafter. Initiators have shown a steady decline from 1991 and have fallen to 5% in 2001. Average dividend paid by payers has increased steadily from Rs. 1. 69 crore in 1991 to Rs. 9. 16 crore in 2000 and Rs. 13. 05 crore in 2001 (Figure 4. 3, Appendix Table A4. 2). Regular payers are more in number and have paid higher average dividend compared to that of current payers and initiators (Appendix Figures A4. 6 and A4. 7). Current payers have paid higher dividend compared to initiators except in the year 2001. The number of initiators have increased up to the year 1995 and have shown a decline thereafter, where as current payers have steadily increased in number up to 2000. 10 Figure 4. 2 Dividend Behaviour of Indian Corporate Firms During 1990 2001 (in %) 80% 70% 60% % Non-Payers % Payers % of Firms 50% 40% 30% 20% 10% 0% 1990 1992 1994 1996 1998 2000 Year Figure 4. 3 Comparision of Average Dividend Paid During 1991 2001 by Payer Group Initiator Current Payers Regular Payers Total Payers 20 15 10 5 0 Rs. Crore 1991 1993 1995 1997 1999 2001 Year A comparison of index and non-index firms shows that the former group of companies on average has paid more dividend than the latter group (Table A4. 3 and A4. 4). Similarly, it is observed that companies, which constitute popular market indices such as Sensex and Nifty paid more dividends compared to companies in the broad market indices such as BSE 100, CNX Mid-Cap, BSE 200, CNX 500, and BSE 500. These observations are on the expected lines as higher dividend payment is one of the important criteria for inclusion of stocks into indices. A study of number of companies paying dividend also reveals that a significantly larger proportion of index firms have paid dividend compared to non-index firms. 29 out of 30 Sensex firms and 49 out of 50 Nifty firms have paid dividend in 2001, the exception being Tata Engineering and Locomotive Company Ltd. (TELCO). Analysis of industry-wise average dividend paid shows that in the early 1990s, firms in the diversified industry have paid more dividends followed by mining firms and electricity firms (Table 4. 3). However, by the end of 2000 and 2001 firms in the electricity industry have paid more dividend followed by mining and diversified companies. It has also been observed that textile companies have continued to pay low amounts on an average throughout the sample period where as firms in the financial services industry have improved their average dividend payments over the sample period. The recent h growth firms in the computer igh 11 hardware and software segments, which are part of the machinery industry, have generally shown lower dividend payments. In sum, the number of firms paying dividend during the study period have shown an up trend till 1995 and have fallen subsequently. Further, compared to PAT the dividend payments have exhibited a smooth trend implying that dividend smoothening is occurring in the Indian context. Regular payers are more in number and have paid higher average dividend compared to that of current payers and initiators. Of the nonpayers, former payers are growing in numbers. Index firms appear to pay higher dividends compared to that of non-index firms. Further, smaller indices appear to have higher average dividend compared t that of o larger indices. Industry trends indicate that firms in the electricity, mining and diversified industries have paid more dividend where as textile companies have paid less dividends. Firms in the machinery industry which includes computer hardware and software segments have shown lower dividends. Table 4. 3 INDUSTRY Average Dividend Paid During 1990-2001 – Industry-wise (in Rs. Crore) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 1. 09 3. 56 1. 28 . 67 . 88 . 70 . 80 2. 57 . 39 . 50 1. 02 . 48 1. 25 . 96 3. 88 1. 14 1. 39 . 97 . 65 . 90 2. 79 . 51 . 62 . 76 . 47 1. 17 1. 05 4. 24 1. 19 1. 47 . 98 . 72 1. 37 2. 97 . 72 . 70 . 86 . 47 1. 0 . 97 5. 11 2. 26 1. 38 . 89 . 73 1. 36 3. 57 . 62 . 64 . 92 . 53 1. 06 1. 08 6. 14 5. 85 1. 49 . 94 . 83 1. 72 2. 87 . 73 . 63 1. 01 . 72 1. 39 1. 38 1. 57 1. 69 1. 92 7. 72 10. 13 10. 99 12. 86 9. 54 13. 08 18. 31 17. 37 2. 10 2. 46 2. 72 3. 16 1. 02 . 80 . 90 1. 12 . 99 1. 11 1. 13 1. 20 2. 20 2. 39 2. 14 1. 80 2. 94 8. 87 17. 44 22. 23 . 70 . 75 . 57 . 35 . 85 1. 18 1. 00 . 86 1. 07 1. 18 1. 23 1. 34 . 86 . 82 . 58 . 51 2. 02 2. 83 3. 58 3. 18 1. 68 17. 17 26. 33 3. 20 1. 13 1. 34 1. 40 21. 99 . 56 . 90 1. 34 . 48 2. 95 2. 41 22. 76 27. 24 4. 25 1. 34 1. 58 1. 72 26. 31 . 58 1. 12 1. 42 . 56 3. 44 2001 Firms 2. 46 29. 55 48. 7 5. 29 1. 89 2. 11 3. 08 35. 36 1. 05 1. 51 4. 07 . 56 3. 03 1138 184 58 1097 745 1065 555 81 324 296 1264 750 225 Chemicals and Plastics Diversified Electricity Financial Services Food and Beverages Machinery Metals and Metal Product Mining Misc. Manufacturing Non-Metallic Mineral Pro Other Services Textiles Transport Equipment 4. 2 Dividend Per Share Average dividend per share (DPS) has increased from 14 paisa in 1990 to 26 paisa in 2000 and 15 paisa in 2001 (Table 4. 4, Figure 4. 4). An analysis of distribution of firms shows that 39 percent have paid nil DPS in 1990 and the percentage has increased to 67. 7 in 2001 (Table 4. ). Percentage of firms in the average class i. e. , DPS in the range of Rs. 0 to Rs. 0. 25 have declined from a high of 45. 9 in 1990 to 18. 5 in 2001. This implies that the increased average DPS over the latter period has mainly been due to a few firms paying larger DPS. Firms in chemicals and plastics industry have steadily improved their DPS from 14 paisa in 1990 to 27 paisa in 2000 and 25 paisa in 2001 (Table 4. 6). Where as textiles firms have shown a decline in DPS from 13 paisa in 1990 to 6 paisa in 2001. Machinery firms have paid a steady 12 to 14 paisa except for the years 1996 and 1997 when they paid marginally more. An analysis of index and non-index firms DPS shows that index firms on an average paid more DPS than non-index firms (Table A4. 14). Similarly, narrow indices have high average DPS than broad indices. 12 Table 4. 4 Average Dividend Per Share (DPS) During 1990-2001 (in Rs. ) Year Number Minimum Maximum of Firms DPS DPS 1990 1694 0 12. 71 1991 2153 0 10. 58 1992 2468 0 15. 58 1993 3028 0 51. 2 1994 3953 0 57. 5 1995 5032 0 135. 33 1996 5536 0 174. 67 1997 5801 0 222 1998 5911 0 350. 33 1999 6176 0 249. 75 2000 6167 0 266. 38 2001 4734 0 61. 5 Common 866 Firms10 Average DPS 0. 1406 0. 1385 0. 1427 0. 1514 0. 1582 0. 803 0. 2158 0. 198 0. 2337 0. 2544 0. 2571 0. 1538 Std. Deviation 0. 3455 0. 3009 0. 3568 1. 0025 1. 2983 2. 3543 3. 3243 3. 4834 5. 8833 4. 8938 4. 4156 1. 2899 Average DPS (1% trimmed) by all payers have increased from 21 paisa in 1991 to 31 paisa in 2000 and 29 paisa in 2001 (Figure 4. 5). Of the payers, regular payers have consistently paid more dividend per share compar ed to other payers. Similarly initiators have always paid lower dividend per share compared to current payers. Figure 4. 4 Average Dividend Per Share (DPS) During 1990-2001 Average DPS (in Rs. ) Average DPS 0. 30 0. 25 0. 20 0. 15 0. 10 0. 05 0. 0 1990 1992 1994 1996 1998 2000 Year An analysis of recurrence of dividend per share group shows that two firms have consistently paid dividend in the range of 25 to 50 paisa per share for all the 12 years, where as 18 firms have paid up to 25 paisa (Appendix Table A4. 6 and A4. 7). An analysis of dividend reductions by firms shows that only five companies namely Mahindra Sintered Products Ltd, Otis Elevator Co. (India), Bharat Electronics, Amritlal Chemaux, and Carborundum Universal have consistently paid higher dividend per share out of a 330 firms that paid dividends in all years of the sample period (Appendix Table A4. ). 43 firms registered a single instance of dividend per share reduction, where as 68 firms lowered twice, 82 firms lowe red thrice etc. On the whole average DPS has shown a steady growth except in the year 2001. Regular payers have consistently paid more dividend per share compared to other payers, where as initiators have always paid 5 common firms are lost on account of missing information on number of outstanding stocks and hence there is difference in the number of common firms from that of Table 4. 1. 10 13 lower dividend per share. Analysis also shows that only a few firms have consistently paid same levels of dividend. Index firms on an average paid more DPS than non-index firms. Similarly, narrow indices have high average DPS than broad indices (Appendix table A4. 8). Firms in chemicals and plastics industry have steadily improved their DPS, where as textiles firms have shown a decline in the study period. Machinery firms have paid a steady DPS. Figure 4. 5 1% Trimmed Dividend Per Share by Payer Type Current Payers Initiators Regular Payers Total 0. 35 0. 3 DPS (in Rs. ) 0. 25 0. 2 0. 15 0. 1 0. 05 1991 1993 1995 1997 1999 2001 Year Table 4. 5 Distribution of Firms in terms of Dividend Per Share During 1990 – 2001 DPS Rs. Rs. 0 – 0. 25 Rs. 0. 25 – 0. 50 Rs. 0. 50 – 0. 75 Rs. 0. 75 – 1 Rs. 1 – 2 Rs. 2 – 5 Rs. 5 Percentage of Companies in Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 39 41 37. 9 39. 9 41. 1 44. 9 50. 8 58. 9 64. 5 67. 5 67. 8 67. 7 45. 9 43. 1 46. 2 46. 9 45 42. 3 35. 8 27. 5 22. 2 19. 5 18. 6 18. 5 13. 5 13. 7 13. 7 11. 2 12. 1 10. 6 10. 4 9. 8 8. 7 7. 6 7. 4 7. 8 0. 9 1. 3 1. 4 0. 9 0. 7 1. 1 1. 5 2. 3 2. 8 2. 5 2. 6 2. 7 0. 4 0. 5 0. 4 0. 7 0. 8 0. 4 0. 6 0. 6 0. 6 1. 1 1. 2 1. 3 0. 2 0. 3 0. 3 0. 2 0. 2 0. 3 0. 4 0. 6 1 1. 1 1. 4 1. 4 0. 1 0. 1 0 0. 1 0. 1 0. 2 0. 2 0. 1 0. 0. 3 0. 6 0. 4 0. 1 0 0 0. 2 0. 1 0. 1 0. 2 0. 2 0. 2 0. 3 0. 4 0. 3 Table 4. 6 Industry-wise Dividend Per Share (DPS) During 1990-2001 (in Rs. ) INDUSTRY Chemicals and Plastics Diversified Electricity Financial Services Food and Beverages Machineray Metals and Metal Product Mining Misc. Manufacturing Non-Metallic Mineral Pro Other Services Textiles Transport Equipment 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 FIRMS . 14 . 15 . 14 . 12 . 17 . 15 . 12 . 17 . 17 . 18 . 27 . 25 1138 . 19 . 21 . 26 . 20 . 20 . 19 . 21 . 22 . 21 . 22 . 27 . 21 184 . 13 . 10 . 11 . 11 . 11 . 10 . 12 . 9 . 10 . 10 . 13 . 10 58 . 08 . 11 . 13 . 34 . 24 . 21 . 28 . 12 . 15 . 14 . 19 . 18 1097 . 20 . 20 . 18 . 23 . 31 . 47 . 49 . 58 . 85 . 21 . 16 . 13 745 . 12 . 13 . 14 . 14 . 13 . 13 . 17 . 19 . 12 . 14 . 14 . 14 1065 . 13 . 11 . 11 . 09 . 10 . 10 . 12 . 09 . 07 . 06 . 07 . 07 555 . 05 . 07 . 06 . 07 . 09 . 06 . 07 . 08 . 13 . 10 . 11 . 09 81 . 12 . 12 . 14 . 10 . 11 . 10 . 10 . 15 . 06 . 16 . 21 . 30 324 . 10 . 11 . 11 . 09 . 09 . 09 . 10 . 08 . 08 . 07 . 09 . 09 296 . 17 . 15 . 17 . 15 . 13 . 24 . 38 . 28 . 42 . 88 . 73 . 12 1264 . 13 . 14 . 13 . 11 . 12 . 09 . 08 . 06 . 06 . 05 . 07 . 06 750 . 2 . 12 . 12 . 12 . 13 . 13 . 15 . 18 . 16 . 15 . 21 . 17 225 14 4. 3 Dividend Payout Ratio An analysis of average percentage dividend payout (PR) during 1990 – 2001 shows a volatile trend (Table 4. 7 and Figure 4. 6). Percentage PR increased from 27. 39 in 1990 to 32. 95 in 1997 and then showed a declining trend till 2000 before reaching the peak average percentage PR of 40. 53 in 2001. However, 1% trimmed average percentage PR showed a more stable pattern of around 24 percent PR up to 1997 and then has shown a declining trend before finally reaching 16. 81 percent in 2001 (Appendix Table A4. ). Table 4. 7 Average Percentage Payout During 1990 – 2001 Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 No. of Average Std. Firms % Payout Deviation 1382 1714 2022 2533 3156 3770 4042 4258 4335 4503 4383 3387 27. 39 25. 19 27. 54 27. 98 28. 19 25. 88 27. 44 32. 95 31. 39 22. 82 21. 6 40. 53 37. 77 41. 04 48. 31 37. 83 61. 96 38. 06 88. 12 139. 85 453. 37 120. 19 67. 49 1196. 96 1% Trimmed Average % Payout 24. 98 23. 11 24. 25 25. 72 24. 92 23. 84 23. 99 23. 91 18. 64 16. 98 17. 47 16. 81 1% Trimmed No. of Firms 1369 1697 2002 2508 3125 3733 4002 4216 4292 4458 4340 3354 An analysis of distribution of firms by dividend payout percentage shows that as high as 26 percent of firms in 1990 and 56. 6 percent in 2001 have paid out nothing (Table 4. 8 and Appendix, Figure A4. 6). However, more than 10 percent firms have paid dividend in excess of 75 percent of their net profits. An analysis of dividend payout recurrence shows that very few firms have maintained the same payout for a longer period of time (Appendix Table A4. 10 and A4. 11). For instance, only one firm – Hindustan Lever Limited – has paid out a dividend in the range of 50 to 75% of its net profit for entire sample period. Similarly another firm – Maharashtra Scooters Limited maintained a dividend payout in the range of 10 to 20% for 11 of the 12-year sample period. Similarly, Kinetic Engineering Ltd. , Lakshmi Machine Works Ltd. , and Dalmia Cement (Bharat) Ltd. have paid out in the range of 10 – 20% for 10 of the 12-year sample period. Figure 4. 6 Average % Payout During 1990-2001 Average % Payout 50 40 30 20 10 0 1990 1992 1994 1996 1998 2000 1% Trimmed Average % Payout Average Payout % Year 15 An analysis of industry-wise DPO shows a declining trend across all industries during the sample period (Table 4. ). Diversified firms, which have a DPO in excess of 25 percent in 1990, have less than 14 percent in 2001. Firms in metals and metal products industry have registered a high degree fall in DPO from 22. 84 percent in 1990 to 8. 74 percent in 2001. Table 4. 8 Distribution of Firms’ Payout Percentage During 1990 2001 Dividend Payout % 0 0 10 10 20 20 30 30 40 40 50 50 75 75 100 100 200 200 Firms % of Firms 1990 1991 26 6. 9 14. 5 16. 5 12. 6 8. 2 10. 1 3. 5 1. 2 0. 4 1382 1992 1993 28. 9 7. 2 11. 9 13. 5 12. 3 9. 5 10. 5 4. 6 1. 3 0. 4 2533 1994 26. 6 8 14. 3 15 12. 7. 7 10. 2 4. 5 0. 9 0. 3 3156 1995 26. 7 6. 6 15. 6 16. 7 12. 5 8. 7 8. 6 3. 4 0. 9 0. 3 3770 1996 33. 3 5. 5 13. 6 13. 7 10. 8 7. 3 8. 6 5. 4 1. 4 0. 4 4042 1997 1998 1999 2000 2001 45. 4 52. 8 57 55. 8 56. 6 3. 1 3. 4 3. 4 3. 8 3. 8 7. 9 7. 6 6. 7 6. 6 7. 6 10. 9 9. 8 8. 2 8. 9 7. 9 8. 5 7. 5 6. 9 6. 7 6. 9 6. 4 5. 4 5. 2 5. 4 4. 8 9. 1 7. 8 6. 7 6. 5 7. 1 5. 2 3. 2 3. 9 4. 2 3. 2 2. 1 1. 6 1. 3 1. 5 1. 5 1. 3 1 0. 7 0. 7 0. 7 4258 4335 4503 4383 3387 26. 5 25. 3 9. 3 9. 2 14. 1 13. 9 17. 2 16. 1 12. 6 13. 3 7. 1 8. 8 9 8. 9 2. 9 2. 7 0. 9 1. 4 0. 2 0. 4 1714 2022 Table 4. 9 Industry-wise Dividend Payout During 1990 – 2001 (in %) INDUSTRY Chemicals and Plastics Diversified Electricity Financial Services Food and Beverages Machineray Metals and Metal Product Mining Misc. Manufacturing Non-Metallic Mineral Pro Other Services Textiles Transport Equipment 1990 23. 92 25. 28 17. 98 23. 28 24. 47 23. 93 22. 84 10. 28 18. 10 19. 71 20. 01 16. 83 19. 31 1991 20. 38 20. 95 16. 21 27. 01 23. 15 20. 36 21. 47 7. 29 18. 08 17. 75 21. 15 15. 98 19. 96 1992 21. 51 22. 78 14. 15 28. 50 24. 19 22. 87 19. 86 12. 28 15. 69 16. 95 19. 25 17. 26 21. 61 1993 23. 38 25. 48 13. 37 32. 11 22. 4 23. 42 20. 65 9. 56 17. 18 16. 27 19. 84 20. 98 21. 29 1994 20. 14 22. 74 12. 48 29. 87 20. 40 23. 67 20. 92 14. 04 17. 87 14. 78 21. 15 20. 54 23. 26 1995 21. 88 23. 23 16. 98 27. 25 17. 01 22. 07 19. 76 12. 10 18. 91 14. 92 19. 60 19. 20 20. 99 1996 20. 53 21. 61 12. 70 31. 74 17. 23 20. 83 18. 82 16. 58 17. 81 13. 87 19. 34 17. 30 19. 69 1997 18. 37 23. 27 16. 32 29. 19 16. 14 19. 45 16. 78 14. 65 15. 55 13. 62 17. 43 13. 84 22. 46 1998 14. 76 19. 34 10. 42 16. 12 12. 73 16. 28 12. 56 11. 50 9. 84 10. 78 14. 00 11. 29 20. 96 1999 13. 84 17. 41 9. 35 14. 82 12. 67 15. 36 9. 37 9. 87 12. 8 9. 66 12. 27 7. 99 18. 74 2000 14. 18 17. 52 12. 68 16. 21 12. 80 15. 24 9. 16 11. 98 12. 59 8. 93 12. 85 9. 04 20. 18 2001 13. 71 13. 59 13. 08 14. 30 10. 22 15. 15 8. 74 11. 76 15. 09 11. 29 12. 54 8. 02 17. 29 Total payers have registered an increase in payout from 31. 25% in 1991 to a peak of 43. 02% in 1997 and finally paid out 37. 64% in 2001 (Figure 4. 7 and Appendix Table 4. 12). Of the payers, regular payers have consistently paid higher payout compared to that of current payers. Further, initiators have shown higher fluctuations in their payout compared to that of regular payers. In sum, average percentage PR showed a more stable pattern up to 1997 and then has shown a declining trend. Analysis of dividend payout recurrence shows that very few firms have maintained the same payout for a longer period of time. Industry-wise DPO shows a declining trend across all industries during the sample period. Of the payers, regular payers have consistently paid higher payout compared to that of current payers. Further, initiators have shown higher fluctuations in their payout compared to that of regular payers. 16 Figure 4. 7 1% Trimmed Dividend Payout % by Payer Type Current Payers Regular Payers 50 Initiators Total Payers % Payout 45 40 35 30 25 20 1991 1993 1995 1997 1999 2001 Year 4. 4 Dividend Yield Average dividend yield for all companies during the period 1991 to 2001 has declined from 1. 73% in 1991 to . 55 in 1993 before finally recovering to 1. 61 in 1998 and again falling marginally to 1. 24% in 2001 (Table 4. 10 and Figure 4. 8). On the whole the dividend yield is range bound in the region of 0. 5% to 1. 73%. The reason for the fall in 1993 could be due to high increases in market capitalizations of a number of stocks in the face or irregularities in the stock market in 1992. Analysis of dividend yield by type of payer shows that initiators have always paid higher levels of dividend yield compared to that of current payers and regular payers (Figure 4. 9, and Appendix Table A4. 23). Similarly current payers have paid higher dividend yield compared to that of regular payers. Dividend yields of initiators have declined from 6% in 1991 to 1. 51% in 1993 before recovering and reaching an all time high of 10% in 1998. Compared to this current payers yielded about 5% in 1992 before falling to 1. 81 in 1993 and have subsequently recovered and reached all time high of 8. 2% in 2000. On the other hand regular payers started with a yield of close to 5% but have fallen to a low of 1. 5 in 1993 before reaching an all time high of 7. 76% in 2000. Table 4. 10 1% Upper Trimmed Dividend Yield (%)During 1991 2001 Year Mean Median SD Firms 1991 1. 73 . 0 2. 74 1452 1992 1. 66 . 0 2. 57 1603 1993 0. 55 . 0 0. 94 1989 1994 1. 68 . 0 3. 02 2559 1995 1. 44 . 0 2. 85 3481 1996 1. 01 . 0 1. 88 4214 1997 1. 46 . 0 2. 99 4864 1998 1. 61 . 0 3. 80 5049 1999 1. 44 . 0 3. 86 5235 2000 1. 43 . 0 3. 96 5182 2001 1. 24 . 0 3. 15 4097 Note: Median values are considered only up to 1 decimal. However, there are non-zero values. On the whole dividend yield of aggregate payers shows a significant increase from 1991 to 2001. 17 Average dividend yield has differed from industry to industry (Table 4. 11). Diversified firms, followed by firms in electricity, food and beverages and textiles industries paid higher dividend yields in 1991 while financial services and mining firms paid the lowest. By 2001 diversified firms and electricity continue to pay higher dividend yields where firms in transport industry have improved their dividend yields by 2001. However, food and beverages and textile firms recorded lowered their dividend yield by 2001, where as firms in financial services, and mining have improved their dividend yields. Figure 4. 8 1% Upper Trimmed Dividend Yield During 1991 2001 2. 0 1. 8 1. 6 1. 4 1. 2 1. 0 0. 8 0. 6 0. 4 0. 2 0. 0 1991 1993 1995 1997 1999 2001 Average (%) Year Figure 4. 9 1% Upper Trimmed Dividend Yield by Payer Type Current Payer 12 Initiator Regular Payer Total Average (%) 10 8 6 4 2 0 1991 1993 1995 1997 1999 2001 Year On the whole the dividend yield is range bound during the study period. Analysis of dividend yield by type of payer shows that initiators have always paid higher levels of dividend yield compared to that of current payers and regular payers. Diversified firms and firms in the electricity industry have paid higher dividend yields during the study period. 4. 5 Summary of Analysis of Dividend Trends The number of firms paying dividend during the study period has shown an up trend till 1995 and has fallen subsequently. Average DPS on the other hand has shown a steady growth e xcept for year 2001. Average percentage PR showed a more stable pattern up to 1997 and then has shown a declining trend. Dividend yield measure is range bound. 18 Analysis also shows that only a few firms have consistently paid same levels of dividend. Analysis of dividend payout recurrence shows that very few firms have maintained the same payout for a longer period of time. Of the payers, regular payers have consistently paid higher payout as well as higher average dividend compared to that of current payers. Iinitiators have always paid higher levels of dividend yield compared to that of current payers and regular payers. Further, narrower indices appear to have higher dividends compared to that of broader indices. Industry trends indicate that firms in the electricity, mining and diversified industries have paid higher dividends where as textile companies have paid less dividends. Firms in the machinery industry which includes computer hardware and software segments have shown lower dividends. Table 4. 11 Average Dividend Yield (%) Industry-Wise During 1991 2001 Industry Chemicals and Plastics Diversified Electricity Financial Services Food and Beverages Machinery Metals and Metal Product Mining Misc. Manufacturing Non-Metallic Mineral Products Other Services Textiles Transport Equipment 1991 1. 79 2. 97 2. 27 0. 2 2. 18 1. 66 1. 76 0. 11 1. 41 1. 4 1. 18 2. 06 1. 53 Average 1% Upper Trimmed Dividend Yield in Year 1992 1993 1994 1995 1996 1997 1998 1999 1. 92 0. 55 1. 68 1. 39 0. 99 1. 55 1. 91 1. 82 2. 49 0. 8 2. 64 1. 56 1. 3 2. 16 2. 44 2. 12 1. 31 0. 69 1. 49 1. 04 1. 14 1. 07 0. 93 0. 85 0. 9 0. 41 2. 28 1. 98 1. 45 1. 87 1. 29 1. 05 2. 06 0. 58 1. 4 0. 92 0. 7 1. 21 1. 63 1. 38 1. 55 0. 61 1. 8 1. 57 1. 07 1. 54 1. 87 1. 7 1. 81 0. 53 1. 62 1. 71 1. 15 1. 43 1. 33 1. 22 0. 05 0. 01 0. 02 0. 21 0. 52 0. 45 0. 56 1. 12 0. 98 0. 33 1. 51 1. 32 0. 89 1. 18 1. 35 1. 74 1. 55 0. 49 1. 15 1. 02 0. 86 1. 08 1. 36 1. 46 1. 37 0. 5 1. 33 1. 3 0. 81 1. 23 1. 33 0. 97 1. 8 0. 62 2. 08 1. 2 1 1. 41 1. 74 1. 48 1. 48 0. 55 1. 61 1. 36 1. 22 1. 97 2. 42 2. 24 2000 1. 66 2. 99 1. 47 1. 33 1. 12 1. 32 1. 29 0. 58 1. 34 1. 66 1. 05 1. 65 2. 76 2001 1. 35 2. 11 1. 99 1. 03 1. 06 1. 01 1. 2 0. 81 1. 29 1. 43 0. 98 1. 6 2. 04 4. 6 Changes in Tax Regime and Dividend Propensity Analysis of influence of change in tax regime on dividend propensity shows that total dividend per share has come down from an average of Rs. 0. 84 to Rs. 0. 71, where as average payout percentage has increased from 33. 33% to 51. 05% (Table 4. 12). Mimicking the trends for total firms, regular payers have registered lower DPS and higher payout percentage. As opposed to these changes over sub-periods of 3 years before and after the change in tax regime, one year changes show that DPS has more or less remained at the same level, where as payout percentage has come down from 1997 to 1999. However, paired samples t-test shows that these differences are not statistically significant, except in the case of payout percentage from 1997 to 1999 (Table 4. 13). In sum, it can be inferred from the present study that tax regime changes have not really influenced the dividend behavior of Indian corporate firms and that the tradeoff theory does not hold true in the Indian context. 9 Average Dividends Before and After the Tax Regime Change Variable Total DPS (in Total Firms Rs) Regular Payers Total DPS (in Rs. ) Immediate DPS (in Rs. ) Years Average Total Firms Payout % Average Regular Payers Payout % Immediate Payout % Years Sample After Before After Before 1999 1997 After Before After Before 1999 1997 Mean . 71 . 84 1. 55 1. 72 . 22 . 22 51. 05 33. 33 60. 53 38. 07 27. 78 35. 87 N 2597 2597 765 765 4848 4848 1217 1217 1000 1000 2987 2987 SE Correlation . 17 . 519 . 24 . 27 . 241 . 71 . 06 . 426 . 05 19. 19 . 015 1. 43 23. 35 . 008 1. 68 2. 65 . 072 2. 87 Sig. .000 . 000 . 000 . 610 . 795 . 00 Table 4. 12 Influence of Change in Tax Regime on Dividend Propensity: Paired Samples T-test Difference SE After Before Total Firms -. 13 . 21 Total DPS Regular Payers -. 17 . 70 (in Rs. ) Immediate Years . 01 . 06 Total Firms 17. 72 19. 23 Average 22. 46 23. 39 Payout % Regular Payers Immediate Years -8. 09 3. 76 t -. 62 -. 24 . 11 . 92 . 96 -2. 15 df 2596 764 4847 1216 999 2986 Sig. .536 . 810 . 909 . 357 . 337 . 032 Table 4. 13 5. Characteristics of Dividend Payers and Non-Payers 5. 1 Profitability Payers on an average have more than twice the payoff on assets compared to that of non-payers (Table 5. 1). This finding is consistent with Fama and French (2001). Of the payers Initiators appear to have on an average higher payoff on assets compared to current payers and regular payers, though their payoffs on assets have shown considerable fluctuations. Current payers and regular payers have similar levels of payoff on assets. Of the non-payers, former payers appear to have higher payoff on assets compared to firms, which never paid dividends. Never paid in turn appears to higher payoff on assets compared to current non-payers. An analysis of EPS of payers and non-payers shows that the former have on an average higher EPS compared to the latter. The difference in magnitude is also quite substantial compared to that of payoff on assets. Of the payers, regular payers have consistently higher EPS compared to that of the other two groups of payers. EPS of current payers and initiators has shown considerable fluctuations over the sample period. Initiators have higher average EPS in the early part of 1990s and last few years of 1990s, where as in the intervening years their EPS has shown a decline. Current payers on the other hand shown an opposite trend compared to that of initiators. All the non-payer groups have shown considerable fluctuations in EPS during the sample period and on average registered a decline in EPS from 1990 to 2001. An analysis of common stock earnings to book equity 20 shows that on an average payers have dominated non-payers as the former firms registered 24% in 1991 and 15% in 2001 to 4% and –6% by the latter in the corresponding years. Of the payers, initiators have higher common stock earnings to book equity compared to that of regular payers and current payers. Regular payers and current payers have similar equity earnings to book equity. However there is a gradual decline in earnings to book equity from 1991 to 2001. Of the non-payer firms, never paid firms appear to have higher equity earnings to book equity compared to current non-payers and former payers. The difference between payers and non-payers is larger in terms of stock earnings to book equity compared to payoff on firm’s assets. These findings are consistent with Fama and French. To sum up it can be concluded that profitability has positive influence on the dividend payment of a corporate firm. Dividend payers are more profitable compared to non-payers. Further, corporate firms in general and non-dividend payers in particular have become less profitable. 5. 2 Growth or Investment Opportunities An analysis of growth of assets shows that payers on an average have higher growth compared to that of non-payers. Payers have grown at percentages of 29. 03 in 1991, 23. 69 in 2000 and 10. 82 in 2001 compared to 18. 65, 4. 12 and 1. 86 in the corresponding years for non-payers. Of the payers initiators appear to have higher growth percentage compared to that of regular payers. Initiators have grown at percentages of 29. 87 in 1991, 49. 13 in 2000 and 57. 54 in 2001 compared to 28. 2, 23. 59 and 6. 78 in the corresponding years for regular payers. Regular payers in turn appear to have higher growth compared to that of current payers. Of the non-payers, never paid have on an average lower growth in assets compared to former payers and current payers. These findings are not consistent with Fama and French where they find never paid firms to have higher growth in assets compared to that of other non-payer and payer groups. Similar trends are observed with regard to growth opportunities as measured by RD investment to total assets. Payers appear to have higher growth opportunities compared to non-payers. Of the payers, regular payers have higher growth opportunities compared to initiators and current payers. Of the non-payers, never paid appears to have lower growth opportunities compared to current non-payers. However the percentage growth opportunities for payers as well as for non-payers are considerably low as the payers on an average have 0. 02% in 1991 and 0. 27% in 2001 compared to 0. 003% and 0. 0447% in the corresponding years for non-payers. An analysis of aggregate market value to book value of assets shows that payers and non-payers do not differ significantly. However, there are differences with in the payer and non-payer groups. For instance, initiators appear to have higher market value to book value compared to regular and current payers, where as in non-payer group, former payers appear to be dominated by both never paid and current non-payers. On the whole in the Indian context higher growth and growth opportunities have not resulted in lower dividend payments by corporate firms. This finding contradicts the findings of Fama and French, whereby they contend that growth opportunities are an important reason for reduced dividend payments by firms. . 3 Size Dividend payers appear to be much larger in size compared to that of non-payers. This observation is consistent with Fama and French (2001). Average size as measured by assets of payers averaged Rs. 104. 4 crore in 1991 and Rs. 1413. 43 in 2001 compared to that of Rs. 56. 92 and Rs. 181. 20 in the corresponding years for non-payers. 21 Of the payers, regular payers have higher assets compared to that of current payers. Current payers in turn have higher assets compared to initiators. Similarly, regular payers have grown an average asset base of Rs. 112 crore in 1991 to Rs. 711 crore in 2001 compared to Rs. 54. 71 crore and Rs. 581. 48 core for initiators and Rs. 47. 11 crore in 1992 and Rs. 654. 9 crore for current payers. Of the non-payers, former payers appear to have higher assets compared to current never paid who in turn have higher asset base compared to current non-payers. Asset base of former payers has grown from Rs. 90. 14 crore in 1991 to Rs. 239. 2 crore in 2001 while in the corresponding period never paid have grown from Rs. 51. 69 crore to Rs. 80. 57 crore. However, current non-payers have registered a decline in their asset base from Rs. 3. 5 crore to Rs. 18. 73 crore during the same period. An analysis of indebtedness of firms s hows that non-payers appear to have higher levels of long-term borrowings to assets compared to that of payers. Of the non-payers, never paid appears to have higher longterm borrowings to assets compared to former payers, who in turn appear to have higher levels compared to current non-payers. Of the payers, regular payers appear to have higher long-term borrowings to assets compared to current payers. Current payers in turn have higher levels compared to initiators. On the whole, the size of assets of firms have gone up during the period 1990 – 2001 and that increased assets seems to have been financed through long-term borrowing implying pecking order of preference for funds. Table 5. 1 Characteristics of Dividend Payers and Non-Payers Year 1991 1992 1993 Average % Payoff on Assets Current Payers 11. 20 12. 23 Initiators 9. 79 15. 15 12. 57 Regular Payers 11. 69 12. 03 12. 00 Total Payers 11. 44 12. 32 12. 07 Current Non-Payers 6. 58 5. 16 3. 69 Former Payers 10. 24 7. 41 6. 23 Never Paid 4. 44 6. 71 5. 29 Total Non-Payers 5. 49 6. 68 5. 29 Average 1% Trimmed EPS Current Payers 3. 0 4. 83 Initiators 7. 05 7. 47 5. 49 Regular Payers 14. 11 12. 79 9. 07 Total Payers 13. 20 11. 97 8. 46 Current Non-Payers -1. 61 -1. 18 -0. 49 Former Payers 0. 71 -2. 72 -3. 45 Never Paid 0. 07 1. 41 -0. 88 Total Non-Payers 0. 04 0. 49 -1. 41 Average Common Stock Earnings to Book Equity % Current Payers 21 18 Initiators 29 39 27 Regular Payers 22 20 19 Total Payers 24 24 21 Current Non-Payers -15 -7 -41 Former Payers 8 -27 58 Never Paid 14 23 47 Total Non-Payers 4 13 23 Average % Growth (Assets) Current Payers 46. 25 27. 29 Initiators 29. 87 92. 24 66. 77 Regular Payers 28. 92 62. 44 32. 20 Total Payers 29. 03 63. 66 33. 0 Current Non-Payers 16. 13 2. 34 26. 55 1994 12. 67 15. 19 12. 24 12. 58 3. 16 5. 37 4. 91 4. 79 7. 30 4. 53 9. 37 8. 67 -0. 35 -1. 64 -0. 62 -0. 81 23 32 21 24 13 72 14 21 27. 95 50. 41 36. 31 36. 17 46. 48 1995 13. 99 13. 66 12. 21 12. 56 1. 99 5. 94 5. 73 5. 41 6. 95 3. 98 8. 90 8. 15 0. 28 0. 51 0. 59 0. 54 20 26 22 23 4 -65 10 -3 1996 12. 27 11. 25 12. 02 11. 99 3. 67 9. 06 3. 89 5. 61

The Apostle Paul Had Four Missionary Journeys. These Journeys Are Resp

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It is the sixth most populous country in the world and has the second largest Muslim population after Indonesia. Pakistan also has the second largest Shia Muslim population. MilItary and its characteristics:- The army plays very important role in the process of development in most of the developing societies. Now military has become key decision-making body of the devel- oping countries. In some countries they have unified thier country after breakdown of political process. There are many example where armed forces have librated their nationcountries . Therefore army in the developing countries not only protects territories from foreign aggression but they have played a significant role in politics. But in some countries it is now routine that army intervenes in political process of the developing countries. Pakistan and Bangladesh are glaring examples. Feature Of Armies In Developing Countries:- As many countries got freedom from the colonialism they concentrated on getting huge and modern trained army The most of developing countries spent and are still spending a huge amount to ensure their security and integrity. As a result they got huge armies. Pakistan, India , China, and Bangladesh etc are the vittal examples. They want to reduce their standing armies, but because of so many factors they are not in position to reduse. More than two third budget is spent on armies and socio-economic aspect are comparatively weak so, we see that of lives and welfare activities are going to downfall on the cost of military development. Master Oriented Armies:- The newly independent countries organize their armies on the pattern of their coloniel armies.Chain of authority, training, wages and other related factors were copied from the coloniel imperial armies. Now the whole coloniel traditions are dying and the armies have started developing new and modern style. Despite the end of colonialism in most of the developing nations pattern , structure and other rules and regulations are higly influenced of colonial armies. Well-Trained And Disciplined:- Army is highly trained discipline instituion in the developing countries. Armed forces are properly trained and are kept according to the face of time. Because of their discipline and training they are to provide assistance in political process of the third world societies particularly in improving administration and organizational effectiveness. When there is political disturbance and break down of the constitutional machinery , so the only savior is a disciplined fores that is army and this is major cause of military intervention in politics. Its severe training and strict discipline keeps in isolated from social life. Respectable Institution:- As the duty of army is to protect the motherland on the cost of their life ,so they are extended full respect by their people. They enjoy a lot of prestige and honour in the society. Army is the custodian of borders both terristorial and ideological of the country in the time of peace and war. This is ahonourableprofeesion in the thirdworld countries. Army In Polotics:- Since the end of the second World War(WW2) intervention of milatary in politics of these societies has almost always been related to major political, economical and social changes in these states. The political activiteis of milatary are generally in the reaction of tension. Main duty of the army is to defend baoders of the counteries but in developing world, army is found in politics. Main causes of military intervention is politics is failiure of civilian constitutional machinery, political unrest trend of military interfernce , to modernize the country , global conspiracy and taste of power etc . Its very pathetic that armed force divert from their own function i.e defense of the countires ang get involve in national politics. Most of the newly emerged states of Asia, African and Latin American countries are under milatary rule. Ambitious Of Avancement:- Many officers are trained in advanced countries. They are to visit developed countries. They bring with them sentiments of modernization their own armies. The army leaders particularly the younger and more desirous are extremly sensitive to the need of moderniztion and technological advancement. So, their orientation plays vittal role in development and advancement. Conservative Outlook:- Army is the most facilitated insdtitution and the belive in status QUO. Army is often conserative and they would not talk revolutionary policies and steps in the social stucture for advancemrnt. IN developing countries armies strickly follow their respective ideologies. For instance, in Pakistan regime initiated the process of islamization and appose socialism and other progressive and westernized ideolgies. So, they are the strong adherents of particular ideology and are generally conservative in outlook. The Most Powerfull Organization:- In the presence global situation of armed compitition , every gevernment is to stive to make army the strongest institution. They are give high standard training and are equipped with modern weapons. Because of regional conflicts space several developing countries are to maintain huge armies. They have been spending a major portion of their budget on armed forces.i.e India and Pakistan where more then two third of the national budget is allocated to army. This is the reason why the armed forces is one of the strongest instituitions in the developing societies. A positive aspect of its powerfullness is facilitation in defence but on the other side , no government is in position to challange their powerfull position. theri demand are ever considered positively. Influence Of Western Tecnology:- The armies of developing countries have been influence by western military technolgy, especially war tecnolgy. Obout all of the countries have taken the WW2 type of army as their models. these nations are to creat a form of organization that is typical of an particular to super nation. Army industries is marching from good to better. Every statse is trying to gain NUCL-EAER and MISSILE technology. Military Intervention In politics:- It is common feature of developing countries that their politics is dealt by military. Its major causes have been discued. In some of the developing societies, some democratic governments welcome military intervention in politics in order to restore order to political life. But it have been observed that militert intervention in civilian politics o thrid world is a crusing obstruction to political development. Military intervention in the third world proved false the belief that the developing states will manage their affiars in a non military fashion. TABLE-1 Military Coups In The Third World (1945- 1972) Region Seccessfull Coups Unseccesfull Coups Total Average interval Latine America 1945-72 53 28 81 4 months Asia 1947-72 21 21 42 7 months Middle east 1949-72 41 42 83 3 months Africa 1960-72 32 46 78 2 months This table shows that a coup attempted once every four months in latine America. Seven months in Asia ,once in three months in Middle East and once every to months in Africa. TABLE-2 Third World In Which Military Occupy Exicutive Position (1976-1977) Region Number of states Latine America 9 Asia 4(Afghanistan,Pakistan,Bangladesh) Middle East 4(Algeria,Iraq,Libya) Africa 18 The degree of military rule in third world certifies the instbility and un effectiveness of the civilian governments since the WW2. TABLE-3 High Influential Position Occupied By Military (1976) Region Number of States Latine America 7 Asia 5(Burma,Indonesia,South korea,Pakistan) Middle East 6(Eqypt,Jordon,Morooco) Africa 5 TABLE-4 States In Which Military Occupy Low Influence(1976) Region Number of states Latine 10 Asia 14 Middle East 8(Bhrein,UAE,Yamen,Tunisai and Iran) Africa 14 In all thes nations the leaders are fully aware that any deteriorotion in public order or the financial affairs could bring the military to power.In large number of the third world states , the military executive live his military service and got elected as civilian executive. Military Intervention In Pakistan(brief background):- Martial law has been declared in Pakistan three times. In the first instance President Iskander Mirza abrogated the Constitution in 1958 and declared Martial Law over the country. The second instance was when General Yahya Khan declared martial law in March, 1969 after Mirzas successor, Gen. Ayub Khan handed over power to him. The 3rd Martial Law declared by the Gen. Muhammad Zia-ul-Haq. After several tumultuous years, which witnessed the secession of East Pakistan, politician Zulfikar Ali Bhutto took over in 1971 as the first civilian martial law administrator in recent history, imposing selective martial law in areas hostile to his rule, such as the countrys largest province, Balochistan. Following widespread civil disorder, General Muhammad Zia-ul-Haq overthrew Bhutto and imposed martial law in its totality on July 5, 1977 in a bloodless coup dà ©tat. Unstable areas were brought under control through indirect military action, such as Balochistan under Martial Law Governor, General Rahimuddin Khan. Civilian government resumed in 1988 following General Zias death in an aircraft crash. On October 12, 1999, the government of Prime Minister Nawaz Sharif was dissolved, and the Army took control once more. But no Martial Law was imposed. General Pervez Musharraf took the title of Chief Executive until the President Rafiq Tarar resigned and General Musharraf became President. Elections were held in October 2002 and Mir Zafarullah Khan Jamali became Prime Minister. Jamali premiership was followed by Chaudhry Shujaat Hussain and Shaukat Aziz. While the government was supposed to be run by the elected Prime Minister, there was a common understanding that important decisions were made by the President General Parvez Musharraf. On November 3, 2007, President General Pervez Musharraf declared the state of emergency in the country which is claimed to be equivalent to the state of Martial Law as the constitution of Pakistan of 1973, was suspended, and the Chief Justices of the Supreme Court were fired. On November 12, 2007, President General Pervez Musharraf issued some amendments in the Military Act, which gave the Armed forces some additional powers. Reasons/factors Of Military Intervention In politics( Military As a stong political group) Military intervention as contitutional caretaker:- A country where indicators of political crises, confusion or corruption are seen,which are to paralize the constitutional setup,the military may interven in politics. If a civilian govenment fails,there is a state of confusion, so, the most powerfull and dicipline of the country is required to control the situation. Such a force is army. So,army jumps in politics. It introduces political reform and to establish the conditions under which political authority may be returned to civilian government. In Pakistan General Ayub khan, Gen. Yahya Khan ,Gen. Zia ul haq and Gen. Pervaz Musharaf intervended in politics, because of of deteriorated political condition. The most important example of the military in this constitutional caretaker role is the army intervention in Turkish politics. Some states constitutionally in powers army to intervene e.g In china and Turkey. In pakistan formation of the national security council is a step towards this fact. In many coutries the course of politics since independence has been assessed by and in monoply of a small group of society. The leadership generally comes from the feudal army-bureaucracy. In pakistan ,the story of military intervention and bureaucratic control of politics starts from the assassination of Liaquat Ali Khan, in October 1951. The story starts when an ex-buearucrate , Ghulam Mohammad become the Governer general after Liaquat Ali Khan. With the appionment of Gen. Ayub Khan pakistans first pakistani Commander in Chief in early 1951, the civil and military bureaucracy began to strenght their grip on power. Gen. Ayub khan teamed up with defense secreatry Major Gen Sikandar Mirza to tighten his grip. if we analyze our contitutional history ,we may find niether the politicians nor the military leaders repected the constitution. Gen. Zia once proudly proclaimed that he could tear up constitution and thtow it into the dustbin when ever he likes. He practised his quotation by men ding the constitution through EIGHT AMANDMENT . The second constitutional assembly, selected by the provincial legislatures, finally approve the first constitution that was enforced on 23 march 1956. Major Gen. Sikandar mirza the first president of pakistan,on 7 october 1958 abrogated the 1956 constitution and aprrove Gen. Ayub khan as martial law administrator. The 1973 constitution destorted by over democratic and military rulers. It has also been put into abeynce by two military governments. Gen. Musharaf once said that constitution is inferior to people intrests. Army roles in politics is now being formaulize through national security concil. The Military A Head OF Reform or Revolution:- Democracy is a very fragile and sensitive form of govenment. Sometimes military jumps in politics as a revolutionary force. Military intervention lead by Sadam Hussian and Muamar Qadaffi are the examples. I n this pattern military assumes power and strives to creat new political institutions that, in long runs will pave ways for effective civilian government .Sometimes military seize power to introduce reform and to boost development in the country. The progrm of BASIC DEMOCRACY by Ayub Khan in pakistan is notable example Jamal Nassar forceable enter the Egytion political scene to introduce -social economical, and political which were essential pre-requisites of democracy To Back Civilian Government:- Final pattern of military intervention in politics include these cases in which the militry does not gain political power. But remains as a force in politicla process. Setting conditions for better performance of civilian government. In pakistan, Gen. Pervez Musharraf played this role. The extent of military involvment in the democratic regime can be best explain by last statement of chief of army staff Gen Musarraf. While speaking on Feburary 8 1999 at Sialkot,he outlined broadly that the pakistan army , beside defending the national frontiet , has been helping the government to stblize various institution and improving the law and oreder situation with in country. He said The arm forces will continue assesting the govenment in improving the institution performance beside aiding the civilian administration in its effort to keeep law and order intact. Failure Of Civil Administration:- When civil administration and democratic institution fails to run the state ,so there is no alternative but the most powerfull and discipline institution intervenes is army. What were the hiddrn designsof Ayub Khan but appearently failure of demoratic institutions paved way for his developed disrespect for politician anddemoratic institutions. Unfortunately, Ayub was followed by Gen. Yahya Khan who along with some politicians divided pakisatan. Gen. Zia intervened when Bhutto was reluctant to arrange free and impartial polls. People and political parties started campaigns against him and his dictatorial rule and military jumped in politics. Gen. Musharraf intervend in politics saying that civil administration has fail to satisfy people. The same is the case in Bangladesh. Political unrest invites military to seize power. Lack of Patriotic Leadership:- If we analyze political history of many developing states, we may conclude that army ever took over power from the political leadership only to protect people from misrule and tyranny. The militry leader ever procalimed that they seized power not for thier own sake because some body had to rescue the country from abuse of state powers. After the creation of pakistan Muslim League loss its prestige because it was a group of oppertunist. No one was serious about nation building. Analysis of political history reveal that maximum politician prefer that persronal intrests and ever secrifies national intrests. Many undevelop country remain in grip of land lards ,industrialists ,khans , nawabs, choudaries and sardars who never care for downtrodden peolple consiquintly unrest among mass paved way for military intervention. Inffective Lagislatures:- Lagislature is an honourable and supreme law making institution .In the third world countries ,quality of lagilatores ever remained weak. There are various factor for example, voting system, lack of consciousness, lack of qualification for lagislators , monoply of self seeking elements political barganing ,LOTA CRACY and floor crossing and irresponsible attitude of the political parties . In law maiking institution fail to satisfiey people by providing effective laws, Lagilature face lack of confidence in such a great situation people want chamge and a rapid change is impossible without military Coup. Same is situation in pakistan and bangladesh. National Problems:- Civil and democratic government is consider very useful and impressive to solve national problems. We see that democratic governments never tried to solve peoples problems inspite of solving thier problems,thes democratic regimes multiply the fire. Corruption ,deteriorated law and order situation ,imflation, unemployment and injustce etc ever reach there peek and democracy planted disapear in heats of people. If democracatic means fails to solve problem then people concentrated their eyes on army. Army is compelled for coup. Military Will to Rule:- If we study early satatements of military Generals in power, we may conclude that deteriorated political conditions and unrest compelled them to intervene. In the early days of military rule every ruler said that army have now desire to rule but to control the situation and shift power to civil adminriistration .It has been seen that militayr government then become reluctant to go back to barraks. They tried to deep root thier grip and they rule for long time so, taste of power is another cause of military intervention in politics. Corrupt Bureaucracy:- Thier are two main reasons for the defunct state of civil administrator setup, which are coruption and political interferance. Colonial governaments had framed civil service to facilitate governments and had less concern with people welfare . This satuation produce and developed coruption in all forms and all levels in bureaucracy. Bureaucracy has capability to mould public opinion as disired . The civil service of pakistan or the cream bureaucracy comaanded great influence over the business community in terms of granting liseces and contracts. A section of pakistani civil servants have destroy national resources and wealth with bear hand .The situation once had reach such a severe level that the central government promulgated the civil services(prevention of corruption) rules in 1953. In pakistan when Gen. Yahya Khan took over he sacked 303 senior civil servents including 38 csp officers and 16 other officers. There after Z A Bhutto as Prime Minister sacked 1400 civil service office r and intoduce political interference in running the bureaucracy . Gen. Zia ul haq introduced institutionalize induction of military officers. Gen. Pervaz Musharraf also interoduce national accountabillity to check bureaurcracy corruption. Exessive military invovlement in civil affiars is itself a serious problem. Military As The Stongest Institution:- As already explained that incase of political unrest and chaos , the only discipline and the stongest force is army. It jums into political arena to govern the defunct state or to assist civil adminitration at least. In biggest peace-time mobilization of the armed forces , a quarter million military personnel were employed to conduct the fifth population census in March 1998. Almost 30,000 personnel deputed to manage the water and power. Development Authority (WAPDA). The setting up of controversial military courts, which are not as man power intensive as the involvment with other civilian administrative activities,symbolizes the power of the military over the citizens. Non Constitutional Role of Army:- Many decveloing countries are multi-racial having low literacy rate and they are socially economically and politically instble. In such a situation democracy cannot go ahead in a soft and transperant manner. Various factors compel army to interven in poltitics because in such a deteriorated situation civil administration fails to cope with . Sometimes our constitutional michenary totally or partially fails and there is no feasible legal way to deal with constitutional breakup. Gen. Musharff interoduced a system of military role in politics in the form of National Security Concil but role of this body is criticized by our politicians. Perhapa its role is more than representative and democratic institution. International Causes:- Some of the critics and politicians are of the view that because of the specific importance of the developing world in international politics, global powers relutant to see these states stable and prospurous. When these states start to develop and march on the roads of stsbility ,some foreign conspirators try to destablize them .It is said that when pakistan was near to adopt its first constitution ,its constitutions was destroy. Military ruled for along time .Dictatorship was followed by other dictatoship. It is said that Zia jumped into politics because USA wanted to remove Bhutto who was Anti-American and advocated unification of the world of Islam. Lack of Democratic Culture:- Democracy is a very fragile and sensitive form of government .It has certain pre-requisites like democratic culture ,effective political parties ,good leadership and tolernce etc. Political parties are the spirit of modern democracy. Unfortunatly political parties have various problems and parties are not in positon to provide people a creative political enviroment. Machiavelli says an evil canbe resisted by commiting a greater evil. Majority is ignorant and nations are generally corrupt. So ignorant and corrupt nations can be deaflt with violence and force. Violence and force is possible in dictatorship .This is the reasons why we repeatedly see military rule in many states. Conclusion:- Impacts Of Military Intervention In Politics:- Military is very respestable intitution for its responsivlitlity is to defend motherland that is very respected duty modern age is the age of democracy and dectatorship in any form is dislike. In pakistan intervention of military in politics give the given result. Place in The International Community:- In international community a nation place is assesed by keeping in view certain factors of whci the most important factor is the FORM OF GOVERNMENT in that country. Those states are honourable where there is is real democracy that is rule of means of BALLOTS. Military government means of BULLETS. Unfortunatly our history is full of military coups. This situation present as a backword and illetrate nation in the globle brotherhood. Lack of Human rights:- It has been observed that ,ilitary is to rule by means of force. According to Jean Jacque Rousseau Will not force bases of state. Overwhelming presence of military officers in civilian administration becomes a source of disturbance in democratic culture. In a military Government human freedom and liberties are comparitively restricted. Political process cannot go to develop. The military administrator are to deal with civil affiars in militay style. Militrizing civil society is therefore, dangerous so far as human right and liberties are concerned. Increase in Military Budget:- It has been seen in variuou causes that Military Generals are to rule supported by army and army rulers in reverse to increase their facilities ot atleat to increase defense budget. Maximum portion of national budget is allocated to military. When army goes back to barrakcks then civilian government is not in position to cut allocation of budget. Becuase there is fear of diffrences between civil government and ARMY. Diversion of Military From defense:- Civil administrator involve military in states affiar in order to cope with mal-administration unfortunately, military involvement is a shortcut mean. Civilian government never concentrate on reforms and to utilize civil servants efficintly. A diturbing thing is to use the military for civilian administrated work like conducting the census, managing the sevice sector, melting out justice and monitering state-owned schools an So on It converts the military attention from theri professional responasbility. Military leaders are often unfimiliar with politics and current political structure of country so, the use massive force which cause as failure to their rule. Distubance in Civil Services:- When military intervenes in politics a cold war between civil and military bueaurcracy starts. Today , while senior military officer have been appionted as govener and as Chief Executives of public sector corporations, while in our history thei retied counterparts have contested election and become political leader. This cold war proves fattle for nationl development. To relax Society:- In Pakistan militayr government is the child of political crises, Unconstitutionak situations politicak barganing,corruption ,inflation, violation of merit social and economical problem in a democratic system invite arny to intervene. Our people are corruptby nature and illiteracy is a chronic issue here,such an enviornment cannot be cleaned with politeness and gentleness.Such a corrupt society may be controlled or reformed by means of force. Military is a source of fear,force and terror. Therefore, military government bringd timely relief in society. Effort of Civilian Govenment to Reduce Military Power:- Sometime civilian government tries to reduce the power,finance and influence of military or wants to bring any sort of change in army so,in reaction army officers refuse to abey that action of civilian government and they overthrow the government. ______________________________________________________________________________ SOURCES:- 1) Political Development Social Change And Reseach Methodolgy BY:- PROF. Bakhtiar 2) Pakistan Affairs BY:- PROF. Ikram Rubbani 3) Web:- www.wikipedia.org www.wikianswers.com