MBS Thesis Proposal 2019, New Format
Sample of MBS Thesis proposal
INTRODUCTION
1.1 General Background
The financial decisions of the firm cannot be taken in isolation but must
be related to the objectives of the firm. That is to say that management must
determine how the decisions will affect the firm in seeking to achieve its
objectives. At this stage it is relevant to state that the objective of the
firm in making its financial decision should be to maximize the economic
welfare of its owners. Dividend policy, as one of the major financing decisions
of firm, has been regarded as an unsolved economic puzzle, which require
rational solution if the prevailing economic paradigm of corporate finance is
to continue (Miller, 1986), however, the corporate dividend policy decision is
not an easy, straight forward and simple job as many people conceive it
(Hackett, 1981). There is controversy among financial economists, practitioners
and researcher on whether or not the dividend affects on stock prices. Due to
the complex nature of the problem, corporate dividend policy has been a subject
of considerable study particularly since the emergence of Modigliani and
Miller's (1961) paper. They state that under given the investment decision of
the company, shareholders, in a perfect capital market are indifferent whether
the company distributes dividend or retains earnings in the business. Their
dividend irrelevancy hypothesis gained much popularity in the finance
literature.
1.2
Statement of the Problem
As a
controversial financial puzzle, which is better for the shareholder, or for
management, paying earnings out in dividends, for the shareholders to reinvest
wherever they choose, or retaining the earnings, to fund the best internal
growth projects that management can identify? Miller and Modigliani (1961)
posited and proved that dividend policy shouldn’t matter in an ideal world,
absent tax arbitrage considerations. Why? Because capital is fungible: a
company has no reason to care whether it garners capital for projects from bond
issuance, from stock issuance or from retained earnings; therefore they should
go wherever the risk-adjusted cost of capital is best. Reciprocally, an
investor has no reason to care whether an investment pays a dividend, which the
investor can reinvest, or whether the company reinvests earnings to fuel
earnings growth equivalent to the foregone dividend yield. Thus, changes
in dividend policy should not affect the value of a firm. Similarly, investment
policy and dividend policy should be independent.
1. What are the earning and dividend
pattern of the banks? Do they have uniformity in dividend practices?
2. .......................................................................................................
3. ...................................................................................................
1.3 Objectives of the Study
The major objective of this study is to assess the corporate dividend
practices of banks and finance companies listed in NEPSE. The specific
objectives are as follows:
a. To identify, analyze and compare the
dividend policies and pattern adopted by the commercial banks.
b. ......................................................................................................
c. ....................................................................................................
1.4 Significance of the Study
The role of capital market in economic development is important which is
signified from economic history of developed countries. Stock market, in one
hand is important functionary of stock market is highly influenced by dividend
policies including others. The rationale behind investing in stock is in hope
of higher dividend. From the long-term investment perspective, dividend is in
first glance where as from the short-term perspective, capital gain is in the
first glance to the investors (Brealey and Myers, 2003). However, dividend
policy of the firm may highly influence to both the investors and dividend
attracts new investors too. Dividend policy of the firm also helps to minimize the
agency problem (Myers, 1984).
1.5 Research Methodology
This study is an empirical study of dividend
practices of Nepalese commercial banks and finance companies.
a.
Population: The population of this study is
commercial banks and finance companies listed in Nepal Stock Exchange.
b.
Sample Size: 3 commercial banks and 3 finance
companies will be selected for the purpose of comparative study.
c.
...................................................................................
d.
............................................................................
1.6 Limitations of the Study
Notwithstanding the analysis performed and
generalization drawn regarding the influence of dividend policy of a company on
variation in its market price of shares, there is considerable place for
arguing about its accuracy and reliability. There are limitations, which weaken
the generalization e.g. inadequate coverage of industries, time periods taken,
reliability of statistical tools used and other variables. This study is simply
a partial requirement of MBS program, so this study will be limited by
following factors.
-
This study will rely on secondary data colleted from
Annual Reports of the respective companies available in NEPSE and SEBON
database.
-
The study period covers only latest ten years i.e.
2008 to 2018.
-
For the purpose of this study only 3 commercial
banks and 3 finance companies have been considered as sample which may not able
to represent the whole population.
-
There are many factors that affect dividend decision
and valuation of the firm. However only those factors related with dividend
will be considered in this study.
- The related
data are considering only cash dividend and exclude the bonus (stock) dividend.
1.7 Organization of the Study
The study has been organized into five chapters, as
prescribed by the university, as follows:
Chapter One: Introduction
Chapter Two: Review of Literature
Chapter Three: Research Methodology
Chapter Four: Presentation and Analysis of Data
Chapter Five: Summary and Conclusion
Chapter One: It contains the introductory part of the
study. This chapter describes the major issues to be investigated along with
the objectives and significance of the study.
Chapter Two: It is devoted to theoretical analysis and
brief review of related and pertinent literature available. It includes a
discussion on the conceptual framework and review of the major empirical
studies.
Chapter Three: It describes the research methodology
employed in the study. This chapter deals with the matter and sources of data,
population and sample, statistical and financial tools.
Chapter Four: It deals with presentation and analysis
of relevant data and information through definite courses of research
methodology.
Chapter Five: It states summary, conclusion and
recommendation of the study. This chapter states main findings, issues and gaps
and suggestive framework of study.
References:
Khan, M.Y. and P.K. Jain (1992), Financial Management, New Delhi: Tata Mc-Graw Hill.
Lintner, J. (1956),
“Distribution of Incomes of Corporations among Divides, Retained Earnings and
Taxes”, American Economic Review,
Vol. 46, pp. 97-113.
Modigliani, F. and M. Miller
(1961), “Dividend Policy, Growth and the Valuation of Shares”, Journal of Business, Vol. 36, pp.
411-433.
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