Financial Management & Corporate Finance Case Study

Case Title:

Infosys Technologies: Dividend History and Market Performance

Abstract:
The objective of the case study is to understand the relationship between the payment of dividends by a firm and its value. The decision of dividend policy describes as to what proportion of profits is to be distributed to the shareholders and what proportion is to be retained by the firm. Each firm has its own dividend policy which may be either payment of low or high dividends. But in the long run, it is evident that the dividends of a company paying low dividends will exceed that of high dividend paying company. However, there are different theories regarding the impact of dividend payment on the value of the firm.

The case study mainly focuses on the dividend payment trend of Infosys Technologies Ltd., which has been paying consistent dividends over the years. It also focuses on the market performance of the company. The case study tries to analyse the dividend policy of Infosys and its effect on the value of the firm over the years.

Pedagogical Objectives:

• To understand the deciding factors for declaring dividends
  • If IRR>Ke then dividends are not paid
  • If IRR<Ke then dividends are paid
• To understand the relation between dividends and the value of a firm
• To evaluate the dividend payment policy of Infosys Technologies Ltd.

Keywords : Financial Management, Dividends, Dividend Policy, Internal Rate of Return, Cost of Capital, Value of the Firm, Dividend Relevance, Market Value and Book Value, Infosys, Infosys Technologies