How Dividend Policies Affect Shareholder Value and Stock price
Alexander Ferreira
Co-Presenters: Individual Presentation
College: College of Business and Public Management
Major: Finance
Faculty Research Mentor: Huaibing Yu
Abstract:
A company’s dividend policy plays a big role in shaping investor perception and overall firm value. Some companies choose to pay consistent dividends, while others reinvest profits back into the business. This project will explore how companies decide on their dividend strategies and how those choices affect stock prices and shareholder wealth.There are different theories on whether dividends actually matter. Some argue that investors don’t care whether they get returns through dividends or stock price growth, while others believe that steady dividends attract investors looking for reliable income. Some also say that when a company increases dividends, it signals strong financial health, while cutting dividends can worry investors. For this project, I’ll look at real companies with different dividend policies—some that pay high dividends, some that don’t pay at all—and analyze how their stock prices and investor reactions compare. I’ll also consider other factors that influence dividend decisions, like profitability, taxes, and the economy.The goal is to understand whether paying dividends leads to higher shareholder value or if companies are better off reinvesting their profits for long-term growth.