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Dividend Policy Case Study Of Private Insurances In Ethiopia
(A.A.U, 2004-06) Gizew, Tamir; .p., Laxmikantham(Mr)
The objective of this study is first, to explain how different dividend policies are practiced by insurance companies, second what factors are influential to determine the amount of dividend payment, and third how the aforementioned policies and factors affect the price of the share, if any. A case of descriptive research method has been employed on four private insurance companies namely, Nile Insurance Company, Awash Insurance Company, Africa Insurance Company and Global Insurance Company from the year 1999 to 2003. Insurances have used any arbitrary percentage of paid up capital as a dividend policy which is different from the common dividend policies. This arbitrary percentage as a dividend policy is not influential to estimate the amount of dividend payments in the future because of no consistency. Legal restrictions, liquidity position, net annual profit, shareholders preferences, growth prospects and taxes are factors which are commonly used to determine the amount of dividend payments. The paper concludes that all insuranc.es · hav~ not prac~iced relevant divided policy though the above factors have c:lused partly to increase and partly to decrease to determine the amount of dividend paym ~nts . . Finally, regardless of any decision in this ~espect, the price of the share remains the same.