I Will Pay For The Following Essay The Impact Of Institutional Ownership On Divi

I will pay for the following essay The impact of institutional Ownership on dividend policy: The Case of Kuwait. The essay is to be 12 pages with three to five sources, with in-text citations and a reference page.

The huge amount of investment held by many institutional investors are coupled with many benefits with respect to monitoring the investments, which the individual investors fail to do themselves (Zeckhauser & Pound, 1990). Firms are forced by the institutional investors to provide monitoring instead of providing monitoring themselves. This is done so that the firms are forced to increase their dividends and are hence forced to reach the external markets for further future funds. Eckbo & Verma (1994) opined that, in order to lessen the expenses like the agency costs, the institutional investors prefer that free cash flow to the companies are distributed in form of dividends. From this outlook, it might be stated that institutional investors possibly will oppose the inclination of managers to favor the disproportionate withholding of cash flow. Additionally, it is likely that the institutional ownership, by means of their voting control, compel managers to distribute dividends (Moh’d et al., 1994. Short et al., 2002).

Jensen & Meckling (1976) stated that the dividend policy acts as a controlling mechanism, which helps in reducing the conflicts between the shareholders and the managers. By paying a large portion of corporate earning as dividends, a lot of agency costs of equity can be reduced (Rozeff, 1982). If there is a high percentage of the dividend payout ratio then there would be less discrimination of cash flow available to be wasted by the managers. With the issuance of a new stock or security, the corporation’s matters will be examined by some intermediary, which acts in the best interest of the shareholders and purchasers (Easterbrook, 1984).

Miller & Modigliani, (1961) concluded that the cash dividend policy had no impact on price of stock or in no way price of stock and cost of capital gets interrupted. The theory of “Bird in hand” suggests in finding the variables

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