This website uses cookies to ensure you have the best experience. Learn more

Are Dividend Payouts Linked To Equity Ownership Pattern – A Case Of The Drugs And Pharmaceutical Industry

1474 words - 6 pages

INTRODUCTION

Dividend payouts are on of the most comprehensively researched areas in Finance . Dividends are used in signalling the future prospects. It’s the manager duty to increase the shareholder wealth , but with separation of management and ownership many conflict of interest arise leading to the Agency Problem. Maximizing the dividend in a in-perfect market , a sentiment is shared that is laced with positive outlook. The signal is for bright future prospects , and dividends are paid even if there exists opportunities for profitable investment opportunities which drives up the value of the share value ,Bonus-issuing firms yielded greater returns to their shareholders than those that ...view middle of the document...

In such a case an investor should prefer to get less dividends paid and earnings to be retained by firm, as they can always get the amount by selling the shares in equity market, in form of ‘home made dividend.

Indian Pharmaceutical Industry
Early after Independence industry growth started with MNC’s exporting low priced generics and few speciality items that were priced higher. Indigenous development of drugs was later encouraged by the government in the 1960’s. Currently it’s an US $21.04 billion industry which is expected to touch US $ 45 Billion by 2020. There are about 250 large units and about 8000 Small Scale Units, which form the major empire of pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the large range of pharmaceutical formulations, like medicines ready for consumption by patients and about 350 bulk drugs, including chemicals having therapeutic value and used for production of pharmaceutical formulations. The Indian pharmaceutical industry meets around 70% of the domestic demand for bulk drugs, drug intermediates, and pharmaceutical formulations. Indian Pharmaceutical industry is highly fragmented with around 20,000 players. The 250 pharmaceutical leading companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. Due to the de-licensing policy, most of the drugs and pharmaceutical products got exemption. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Totally self-reliant and technologically strong, the pharmaceutical industry in India has low costs of production, innovative scientific manpower, low R&D costs, strength of national laboratories and an increasing balance of trade.

Terms Related to Dividend Payouts
Agency Costs - A type of internal cost that arises from, or must be paid to, an agent acting on behalf of a principal.
Dividend Irrelevance Theory – Purports that the firms dividend policy has no effect on either it’s value or cost of capital. Investors value dividends and value equally.
Payout Date – The date of which dividend is actually distributed to the shareholders.

Factors Affecting Dividend payouts –
• Stability of earnings
• Extent of share distribution
• Trade Cycles
• Need for Additional Capital
• Taxation
• Legal Requirements

LITERATURE STUDY

The payment of dividend is associated with profitability position of the firm and is influenced by internal and external factors. The Indian pharmaceutical industry currently tops the chart amongst India's science-based industries with wide ranging capabilities in the complex field of drug manufacture technology, Our study is based on dividend policies of select pharmaceutical companies with respect to their ownership structure.

Dr.T.Sobha Rani and Mr. S.Patha Sarathi published an article “Determinants of Dividends in Indian Pharmaceutical...

Other Papers Like Are dividend payouts linked to equity ownership pattern – a case of the drugs and pharmaceutical industry

The Indian Pharmaceutical Industry Essay

826 words - 4 pages pharmaceutical effluents is a challenging task due to the wide variety of Chemicals produced biological products ,medicinal chemicals , botanical products in drug manufacturing plants such as analgesic, antibiotics, antidepressants, antidiabetics, contracepes, growth regulators, drugs, painkillers, and tranuilizers (Robinson et al., 2007; Ghauch et al., 2009) which lead to wastewaters of variable compositions into natural systems and consequent

An Outline of the Market Structure of the Pharmaceutical Industry

2112 words - 9 pages are just in a harmless ‘price-war’ or in-fact trying to drive the ‘underdogs’ out of the market completely. Part four (i): How do firms in this industry behave in practice? In practice, there has been recent scrutiny over the strategies, pricing and social awareness shown by major companies in the pharmaceutical industry. As mentioned above, oligopolistic markets try to avoid price competition. This leads to large scale advertising

Going Public And The Dividend Policy Of The Company

4707 words - 19 pages some companies the significant proportion is held by the directors and the remainder are widely held by a large number of shareholders, so the directors may effectively control the company.Preference sharesThey also are the part of the equity ownership, attractive to risk-averse investors because of their fixed rate of dividend, which normally must be at a higher level than the rate of interest paid to lenders, because of the relatively greater

Negative Effects Of Ownership In "Lifeboat Ethics: The Case Against Helping The Poor" And "My Wood"

906 words - 4 pages are shown using different methods. Forster claims to have "bought a wood with [his] cheque" (Forster 238), while Hardin seeks to bash third world countries for "wasting and polluting our natural resources" (Hardin 256). The first effect of ownership is weight. A characteristic of owning wood is that it "makes me feel heavy" (Forster 239), suggesting that with the ownership of property, Forster believes there comes attached a subconscious weight

A Case For The Leagalization Of All Drugs

2305 words - 10 pages A Case for the Legalization of DrugsThe beginning of the twenty first century has brought upon a new age of optimism and wonder. Despite all of the announcements on television, our world is far from being drug free. Our societies have given in to the modern war on drugs, which is being fought against our own citizens across the United States. An international effort to stop drug production and use has failed, leaving distress and political chaos

The Effect of Energy Prices on Transportation and Storage Sector’s Equity Returns: the Iranian Case

4778 words - 20 pages effect of energy price changes on transportation and storage sector’s equity returns in Iran. Using a multifactor market model, the findings suggest oil price movements are an important determinant of returns in this industry over the period of our study (January 2005 to March 2010, weekly data). In addition, it is interesting to note that the gas market does not seem to play a role for the industry’s stock returns. Moreover, consistent with the

China Pharmaceutical Tablet Testing Equipment Industry by Size, Share, Trends, Growth and Global Forecast to 2019

996 words - 4 pages quantitatively 2009-2014 global and China’s total market of Pharmaceutical Tablet Testing Equipment by calculation of main economic parameters of each company; The breakdown data of Pharmaceutical Tablet Testing Equipment market are presented by company, by country, and by application. The report also estimates 2014-2019 market development of Pharmaceutical Tablet Testing Equipment Industry. The report then analyzes the upstream raw materials

The Choice of Asset Selloff: a Comparison of Spinoff and Equity Carveout

3531 words - 15 pages The last two decades have witnessed a surge in asset selloffs as positive adjustments to the inefficient diversification and overcapacity undertaken by large firms. Among various practices of asset selloffs, spinoff and equity carve out are two major forms of particular research advantage in that both parent firms (i.e. retained or continuing entities) and subsidiaries are publicly listed on stock exchanges and thus their firm-specific

How International Differences in the Ownership and Financing of Companies Could Lead to Differences in Financial Reporting

1888 words - 8 pages countries and converge notwithstanding the kind of industry or company in question. However, this is not usually the case, especially in areas where the companies involved have different ownership and financing structures. Discussion Factors that could be related to the environment in which a business operates in have been identified as major contributors to differences in financial reporting by different companies in countries across the world

The Aim Of The National Trust To Provide Time Capsules Of Ownership

1854 words - 8 pages capsule of a room because the rooms have all been modified by later owners and changed through time. Only a few rooms really reflect one particular time and owner. An example is The Bath House, restored to about the 1790's, designed by Soane for the 3rd Earl. Many areas of Wimpole are time capsules for more than one owner of the estate. For example the Gothic Tower built by the 1st Earl existed during the ownership of all

Examine The Effects Of A Change In Interest Rates On The Price Of Equity And Government Bonds. Briefly Explain What Other Major Factors Affect The Price Of Equity. 1911 Words

2036 words - 9 pages gilts on behalf of HM Treasury.As with all forms of assets gilts pay a annual yield, known as the coupon in the gilt edged market. However the coupon isn't a perfect guide to the interest rate the Government had to pay when they issued the gilt because stocks are sometimes issued at a premium or discount o their par value.The prices of gilts are determined primarily by interest rates but are also influenced by news and technical influences.Firstly

Related Essays

Pharmaceutical Companies And The Availability Of Hiv Drugs To African Countries

858 words - 4 pages because this period is limited in time. It is perhaps better to describe it as a limited warranty. There are also other limitations. Pharmaceutical companies in some countries may not respect intellectual property and may copy or produce generic drugs even before the patent expires. An important criterion of a monopoly is price control. However, in many countries, a governmental agency is responsible for setting the prices of drugs, making the

Introduction To The Pharmaceutical Industry Essay

531 words - 3 pages Introduction Discovering and bringing one new drug to the public typically costs a pharmaceutical or biotechnology company from £800 million to more than £1 billion and takes an average of 10 to 15 years. The drug discovery and development process is designed to ensure that only those pharmaceutical products that are both safe and effective are brought to market. PPD provides a broad array of drug discovery and development services and

The Function Of Proteins Are Linked To Their Shape

943 words - 4 pages The functions of protein are linked to their shape Proteins are polymers of amino acids joined by strong peptide bonds. The combination of any of the twenty amino acids in any length and sequence allows an almost infinite number of possible structures and functions. The sequence of amino acids in the polypeptide chain is termed the primary structure. The primary structure is unique to a given protein. The primary structure can fold

Pharmaceutical Industry Case Analysis

1532 words - 7 pages multiple regions of the globe including the United States and how Western pharmaceutical firms have responded to their critics regarding the lack of available drugs for countries in Africa that have been plagued by the disease. There are two sides presented in the case opposing each other, the “Western pharmaceutical companies that had transformed themselves from anonymous, low profit chemical suppliers into high profile, top-performing firmsâ