PROFITABILITY ANALYSIS OF

STANDARD CHARTED BANK NEPAL LIMITED

A Project Work Report

By

Suchana Tamang
TU Regd. No. 7-2-0109-0059-2013
Exam Symbol No: 7520008
Ganesh Multiple Campus
Group : Finance

Submitted to:
Faculty of Management
Tribhuwan University
Kathmandu, Nepal

In partial fulfillment of the requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal
Jan, 2021
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DECLARATION

I hereby declare that this project work entitled PROFITABILITY ANALYSIS OF

STANDARD CHARTERED BANK LIMITED submitted to the Faculty of Management,
Tribhuwan University, Kathmandu is an original peace of work under the supervision of
Mr. Manoj Pyakurel, faculty member, GANESH MULTIPLE CAMPUS and is submitted
in partial fulfillment of the requirements for the award of the degree of Bachelors in
Business Studies (BBS). This project work has not been submitted to any other university
or institution for the award of any degree or diploma.

…………………….

Suchana Tamang

Campus name
 iii

SUPERVISOR’S RECOMMENDATION

This project work report PROFITABILITY ANALYSIS OF STANDARD

CHARTERED BANK LIMITED Nepal Limited submitted by SUCHANA TAMANG of
GANESH MULTIPLE CAMPUS is prepared under my supervision as per the procedure
and format requirement laid by the Faculty of Management, Tribhuwan University, as
partial fulfillment of the requirements for the award of the degree of Bachelor of Business
Studies (BBS). I, therefore, recommend the project work report for evaluation.

……………………

GANESH MULTIPLE CAMPUS

Date: Jestha 3rd ,2074

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ENDORSEMENT

We hereby endorse the project work report entitled A STUDY ON PROFITABILITY

ANALYIS OF STANDARD CHARTERED BANK NEPAL LIMITE submitted by
Gautam Khadgi of Kumari Multiple Campus, Tusal, Kathmandu, in partial fulfillment of
the requirements for the degree of the Bachelor of Business Study (BBS) for external
evaluation.

……………………

Sir ko name

GANESH MULTIPLE CAMPUS

Date: Jestha 3rd ,2074

 ACKNOWLEDGEMENT

This report has been prepared for the partial fulfillment of the requirement of the degree of
Bachelor of Business Studies. It would have been almost impossible to complete this
without co-operation and help from different persons.

At first, I would like to express my sincere gratitude and deep respect to my supervisors Mr.
Raj Kumar Dulal, faculty members of Kumari Multiple Campus, for his valuable
suggestions, guidance, and encouragement in the completion of this study.

I would like to express thanks to all the library and administrative staffs of Kumari Multiple
Campus for the necessary help in the preparation of this report. I must not forget to thank
my friends and colleagues for the regular inspiration and support.

Gautam Khadgi

Kumari Multiple Campus

v
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TABLE OF CONTENTS

Title page………………………….……………………………………..…………………………i

Declaration……………………….………..……………………………..…………….…..…….ii

Supervisor’s Recommendation….………………………………………...………………..….iii

Endorsement………………………………………………………………………………………iv

Abstract……………………….……………………………………………………………….…..v

Acknowledgement……………………………………………………………………….……….vi

Table of contents………………………………………………………………………….….….vii

List of Tables……………………………………………………………………………………..ix

List of figures………………………….………………………………………………..………..x

Abbreviations……………………………………………………………………………………xi.

CHAPTER I: INTRODUCTION …………………….………………. 1

1.1 Background of study…..………………………………….………………….1

1.2 Statement of problem………………..………………….…………………....2

1.3 Objective of study …..………………………………..……………………2

1.4 Rationale of study…….…………………………………...…………………3

Report Structure…………..………………………………….….……………….3

CHAPTER II: RELATED LITERATURE REVIEW….………. ….. .5

Conceptual Review ………………………………….…………………….……5

Review of Previous Works…………………………….……………………..…7

 vii

Research Gap…….…………………………………………………………….8

CHAPTER III : METHODS ……………….………………………….. 9

Types of Research……………………………………………………………....9

Population and Sample……………………………………………………….....9

Types of Data……………………………………………………………………9

Techniques of Analysis………………………………………………………...10

Limitations……………………………………………………………………..12

CHAPTER IV : RESULTS AND FINDINGS ……………………….. 13

Presentation of Data in Tables and Figures and findings………………………13

CHAPTER V : DISCUSSION AND CONCLUSION ….…………… 20

Discussions…………………………………………………………………….20

Conclusion and Implications…………………………………………………..22

REFRENCES ............................................................................................23

APPENDICES…………………………………...………………………25
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LIST OF TABLE

Table page no
Table 1

Cash Dividend Payment of Commercial Banks………………………………..13

Table 2 Price Effect after Cash Dividend Payment

On Fiscal Year 2012/13…………………………………………………………14

Table 3 Price Effect after Cash Dividend Payment

On Fiscal Year 2013/14………………………………………………………….15

Table 4 Price Effect after Cash Dividend Payment

On Fiscal Year 2014/15…………………………………………………………16

Table 5 Price Effect after Cash Dividend Payment

On Fiscal Year 2015/16…………………………………………………………17

Table 6 Price Effect after Cash Dividend Payment

On Fiscal Year 2016/17…………………………………………………………18

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LIST OF FIGURE

Fig Page no

Figure 1 Price Effect after Cash Dividend Payment

On Fiscal Year 2012/13 ………………………………………………..….….……….15

Figure 2 Price Effect after Cash Dividend Payment

On Fiscal Year 2013/14……………………………..………………….………..…….16

Figure 3 Price Effect after Cash Dividend Payment

On Fiscal Year 2014/15…………………………….…………………….……………17

Figure 4 Price Effect after Cash Dividend Payment

On Fiscal Year 2015/16…………………………….…………………………………18

Figure5 Price Effect after Cash Dividend Payment

On Fiscal Year 2016/17……………………………….…………………………….…19

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ABBREVIATIONS

AGM Annual General Meeting

A.M. Arithmetic Mean

ANOVA Analysis of Variance

BOD Board of Directors

CDND Cash Dividend Not Declared

C.F. Correction Factor

CHPCL Chilime Hydropower Company Limited

C.V. Coefficient of Variation

DPS Dividend per Share

EPS Earning per Share

F/Y Fiscal Year

HBL Himalayan Bank Limited

HGI Himalayan General Insurance Company

Ltd. Limited

MPS Market Price per Share

NEPSE Nepal Stock Exchange

NRB Nepal Rastra Bank

xi
xii
 1

CHAPTER I

INTRODUCTION

1.1 Background of the Study

Dividends are payments made by a corporation to its shareholders. It is the portion of

corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that
money can be put to two uses: it can either be re-invested in the business i.e. retained
earnings, or it can be paid to the shareholders as a dividend. Many corporations retain a
portion of their earnings and pay the remainder as a dividend.
The development of an economy requires expansion of productive activities, which in turn is
the result of the capital formation, which is the capital stock of the country. The change in
the capital stock of the country is known as investment. Investment is key factor for capital
formation. Investment promotes economic growth and contributes to a nation’s wealth.
Investor desire to earn some return from the investment, without any return there is no any
investment. Investment will block, if there is no return. The total expected return include
two components one is capital gain and other is dividend.(CAP II Financial Accounting
book of ICAN)

In the capital market, all firms operate in order to generate earnings. Shareholders make
investment in equity capital with the expectation of making earning in the form of dividend
or capital gains. Thus, shareholders wealth can increase through either dividend or capital
gain. Once the company earns a profit, it should decide on what to do with the profit. It
could be continued to retain the profit within the company, or it could pay out the profit to
the owners of the company in the form of dividend. Dividends are payment made to
stockholders from a firm’s earning in return to their investment. Dividend policy is to
determine the amount of earnings to be distributed to shareholders and the amount to be
retained or reinvestment in the firm. The objective of a dividend policy should be to
maximize shareholder’s wealth position.Retained earnings are used for making investment
 2

in favorable investment opportunities, which in turn help to increase the growth rate of the
firm. What and how much it is desirable to pay dividend is always a controversial topic
because shareholders expect higher dividend from corporation, but corporation ensure
towards setting aside funds for maximizing the overall shareholders’ wealth. Management is
therefore concerned with the activities of corporation that affect the well being of
shareholders. That well being can be partially measured by the dividend received, but a
more accurate measure is the market value of stock. But stockholders think dividend yield is
less risky than capital gain. (CAP II Financial Accounting book of ICAN)

1.2 Statement of problem

The general problem is not having specific trend and knowledge about the dividend
payment policy of NABIL Ltd. Other specific problem are as follows:

 What is the impact of trend of cash dividend and stock dividend of NABIL ltd?
 What is the relationships between dividend and net income?
 What is the relationships between retained earning and dividend ?

1.3 Objective of the study

The main objective of the study is to analyze the dividend policy and its impact on share
price of NABIL Bank Ltd. Other specific objectives are as follows:
 To examine the trend of cash dividend and stock dividend of NABIL Ltd.
 To explore the relationships between dividend and net income
 To explore the relationships between retained earning and dividend.

1.4 Rationale of the Study

 3

In Nepalese context, most of investors are investing in the stock without adequate
knowledge of the company and performance and dividend policies. They know the investor
objective’s from this study. There are basically two types of objective one is receiving
dividend and another is receiving capital gain.

 This study is useful for the firm’s perspective and to aware the Nepalese investors
 To know the objective of investor they can develop their plans and policies
accordingly.
 To help the investor while investing in share capital. So that they can make correct
decision at right time about the influence of dividend in market price of share and
make investment.

1.5 Report Structure

This study is organized into five chapters.

Chapter I Introduction is introduction which includes general introduction of loan. This

chapter comprises of background, problem statement, objective of the study, rationale and

report structure.

Chapter II Related Literature Review is literature review which includes the theoretical

framework and review of the previous studies like published books, journals, and

unpublished thesis reports separately.

Chapter III Methodology is methods and it will deal research methodology consisting of

type of research, population and sampling, types of data, data collection procedures,

instruments and technique of analysis.

 4

Chapter IV Results and Findings is results and findings which deals with analysis and

presentation of data collected from different sources. The research will analyze the data to

reach closer to the result by using financial and statistical tools and technique.

Chapter V Discussion and conclusion is discussion and conclusion which will provide the

result of discussions, conclusion and implications of the overall study. At the end, an

extensive bibliography and appendices will also include.

 5

CHAPTER II

RELATED LITERATURE REVIEW

2.1 Conceptual Review

Dividend policy decision is one of the three decisions of financial management because it
affects the financial structure, the flow of funds, corporate liquidating and investors’
attitudes. Dividend decision of the firm is a very crucial controversial area of financial
management. The main aspect of dividend policy is to determine the amount of earning to
be distributed the shareholder and the amount to be retained in the firm. When a company
pays dividend, the shareholder benefitted directly. If the company retains the funds for
investment opportunities, the shareholders can be benefitted indirectly through future
increase in the price of their stock. Thus, shareholders wealth can be increase through either
dividend or capital gain. Divined policy involves the decision to pay out earning versus
retaining them for reinvestment in the firm. Any change in dividend policy has both
favorable and unfavorable effects on the firm’s stock price. Higher the dividend means
higher the immediate cash flows to investors, which is good, but lower future growth, which
is bad. The dividend policy should be optimal which balances the opposing forces and
maximizes stock prices.( CAP II Financial Accounting of ICAN)

2.2 Review of Previous Work

If the company declares a dividend payment that's higher or lower than expected, market
sentiment may shift causing the stock price to rise or drop accordingly. An expected change
in price occurs on the ex-dividend date when the company decreases its market cap by the
declared shareholder payout. Dividends also serve as an announcement of the company's
success. Because dividends are issued from a company's retained earnings, only companies
 6

that are substantially profitable issue dividends with any consistency. Though some
companies may issue dividends to create the illusion of profitability, this is the exception
rather than the rule..When a dividend is paid, the total value is deducted from a
company's retained earnings. "Retained earnings" refers to the total amount of profit a
company has accumulated over time that has not been put to other uses. Essentially, it is the
amount of money a business has on account that it can use to pay dividends or fund growth
projects.( Pant, 2010,Financial analysis of current maket)

Dividend decision has great influence on financial structure, flows of funds, corporate
liquidity and so on.The relationship between dividend and the value of the share is not clear
cut. There were irregularities in the dividend payment by the commercial banks of Nepal.
There was also no stability in the dividend payout ratio of the commercial banks. Thus he
has recommended the investors to consider the select company having high profit companies
for purchasing shares.There was a positive correlation between DPS and MPS of
commercial banks whereas no correlation was found in manufacturing companies.There is a
positive relationship between cash flow and current profit and dividend percentage of share.
There are no criteria to adopt dividend payout ratio and it is observed that there is a negative
relationship between payout ratio and valuation of shares. Similarly he found that there was
a negative relationship between MPS and stockholders’ required rate of return also.
(SHRESTHA,2013 DIVIDEND POLICY OF COMMERCIAL BANK )

The third major decision of the firm is its dividend policy, the percentage of earnings it pays
in cash to its stockholders. Dividend payout, of course, reduces the amount of earnings
retained in the firm and affects the total amount of internal financing. The dividend payout
ratio obviously depends on the way earnings are measured for case of exposition, we use
account net earnings but assume that these earning can form true economic earnings. In
practice, net earning may not conform and may not be an appropriate major of the ability of
firm to pay dividends. (Van Horne, 2000,BUSINESS WORLD)
 7

In the Hong Kong Stock Market (HKSE) there were no market makers until 2007. They
found that stock prices dropped on the ex-dividend day by half the dividend amount. Frank
and Jagannathan argued that the unexpected price drop on the ex-dividend day was the result
of transactions on the cum-dividend day occurring at the bid price, while transactions on the
ex-dividend day took place at the asked price.That is, since for the average investor it is a
burden to receive the dividend and then go through the process of collecting it, most
investors prefer not to receive it. Market makers, instead, find themselves in a better position
to collect the dividend, so they buy the stock on the cum-dividend day. As a consequence,
on the cum-dividend day most trades occur at the bid price, while on the ex-dividend day
most trades occurred at the asked price. (Joshi, 2013, SHARE SAROKAR)
 8

2.3 Research Gap

In past ,the value of the firm depends on the firms earning, which result from its investment
policy. The literature suggests that dividend payments should have no impact on
shareholders value in the absence of taxes and market imperfections. Hence, companies
should invest excess funds in the positive net present value projects instead of paying out
them to the shareholders.

The firm operates in perfect capital markets where investors behave rationally,
information is freely available to all and transaction and floatation cost do not exist.
Perfect capital markets also imply that no investor is large enough to affect the market
price of share.
Taxes do not exist or there is no difference in the tax rate applicable to the capital gains
and dividends. This means that investors value a rupee of dividend as much as a rupee of
capital gains.
The firm has a fixed investment policy.
 9

CHAPTER III

METHODOLOGY

3.1 Type of Research

For the analysis of the cash dividends payments of the “A” class financial institutions of
Nepal as categorized by NEPSE, analytical as well as descriptive designs are applied to
achieve the objective of the research.

3.2 Population and Sample

Mainly the “A” class financial institutions as categorized by NEPSE are the population
samples considered for the study.

Our sample is selected from firms listed on the NEPSE. This study focuses on the NABIL
Ltd financial institutions of Nepal. Total no of bank i.e. 27 banks are categorized as
population among which NABIL bank is selected which is sample.

3.3 Types of Data

This research is based on secondary data. Required data is collected from NEPSE, SEBON,
previous thesis and various articles published by various people and organizations. The basic
sources of data used are as follows:

a. NEPSE and SEBON Annual Reports

b. Financial statements of concerned financial institutions
c. Related books and articles
 10

3.4 Techniques of Analysis

Mainly financial methods are applied for the purpose of this study. Appropriate statistical
tools are also used. Among them correlation analysis and hypothesis tests regarded as major
one used for this research.

Tools Used

3.4.1 Arithmetic Mean (A.M)

The mean is the figure we get when the total of all the values in a distribution is divided by
the number of values in the distribution. The arithmetic mean is also known as the average.
It should, however, be remembered that the mean can only be calculated for numerical data.
The mean is an appropriate term than saying average. The mean of data is biased toward
extreme values. The mean is suitable when the scores are distributed symmetrically about
the center of the distribution. This is calculated by using following formulae:

3.4.2 Standard Deviation (S.D.)

The measurement of the scatterness of the mass of figure in a series about an average is
known as the dispersion. The standard deviation measures the absolute dispersion. The
greater amount of dispersion, greater the standard deviation. A small standard deviation
means a high degree of uniformity of the observation as well as homogeneity of a series and
vice-versa. This is calculated as follows:

∴Standard deviation (S.D.) = ∑(X − X) 2

n
 11

3.4.3 Coefficient of Variation (CV)

The coefficient of variance is the relative measure of dispersion, comparable across

distribution, which is defined as the ratio of the standard deviation to the mean expressed in
percent. It is calculates as follows:

∴ Coefficient of Variation (CV) = S.D.

×100
Mean

3.4.4 Karl Pearson’s Correlation Coefficient (r)

If two quantities vary in such a way that movements in the one are accompanied by
movement in other, these quantities are correlated. The degree of relationship between the
variables under consideration is measure through the correlation analysis. Correlation
analysis only helps in determining the extent to which the two variables are correlated but it
does not tell us about cause and effect relationship.

∑ xy
∴Karl Pearson’s Correlation Coefficient (r) = ∑ x 2 ∑ y2

The value of “r” lies between -1 to +1. When r=0, then there is no correlation
between two variables.

3.5 Limitations
 12

 The study is mainly concentrated on the dividend practice and its influence in
prospect of Nepal of NABIL in Nepal.

 The data being taken from different source, therefore authenticity of the data is
dependent on the accuracy of the information used.

 The result and the interpretation are completely rigid and from the view point of the
researcher.
 Among the different aspect of dividend policy only cash dividend is taken for the
analysis.

CHAPTER 4
 13

RESULTS AND FINDINGS

This is an analytical chapter, where an attempt has been made to analyze and evaluate
the data collected.

4.1 Presentation and analysis of Data

To analyze the data collected various presentation and interpretation is done in order
to fulfill the objective of this study, the general public is highly attracted towards the
shares of the commercial banks of the country as they are performing well in the
secondary market.

Similarly they are providing the stock dividend to the shareholders. But the financial
performance of other institutions is not so good. Even majority of the commercial
banks are also not providing good percentage of the cash dividend to their
shareholders.

Cash Dividend Payment of NABIL

Table No.4.1.1

Cash Dividend Payment of Commercial Banks (In NPR)

F/Y NABIL
20012/13 50
2013/14 65
2014/15 70
2015/16 85

2016/17 100
A.M. 74
S.D. 17.15
C.V. 23.17%
 14

The situation of the NABIL bank is also seen well. It has also been distributing
cash dividend regularly. The average cash dividend payment is seen 74% i.e. Rs.
74 per share.

Ex-dividend Test (Empirical Testing)

Table No.4.1.2

Price Effect after Cash Dividend Payment

On Fiscal Year 2012/13 (In NPR)

S No Company Name MPS MPS on MPS Price Change

Before Ex-dividend After On Ex- After Ex-

Date dividend dividend
Date Date
1. NABIL 803 2004/01/04 798 -3 -5
800
 15

From the above table we see that MPS of the who declared the cash dividend
has declined on the ex-dividend date during the fiscal year 2012/13. The large
amount loser company was NABIL with the MPS decline of Rs. 5. The MPS of
NABIL was seen decreased by Rs. 3 on the ex-dividend date.

Fig 1 Price Effect after Cash Dividend Payment on 2012/2013

900
800
700
600
500
400
300
200
100
0
Mps before mps at date mps after ex dividend before ex dividend after
-100

Column3

For the Fiscal Year 2013/14

Table No.4.3 Price Effect after Cash Dividend Payment on Fiscal Year 2013/14 (In NPR)

S No Company MPS MPS on Ex- MPS Price Change

Name Before dividend After On Ex- After Ex-

Date dividend dividend
 16

Date Date
1 NABIL 1259 2004/12/22 1248 +6 -11
1265

From the above table we see that MPS of the who declared the cash dividend
has declined on the ex-dividend date during the fiscal year 2013/14. The large
amount loser company was NABIL with the MPS decline of Rs. 9. The MPS of
NABIL was seen increased by Rs. 6 on the ex-dividend date.

Fig 2 Price Effect after Cash Dividend Payment on 2013/2014

1400

1200

1000

800

600

400

200

0
mps before mps after mps at date ex dividend before ex dividend after

Series 3

For the Fiscal Year 2014/15

Table No. 4.4 Price Effect after Cash Dividend Payment on Fiscal Year 2014/15 (In NPR)
 17

S. No. Company MPS MPS on Ex- MPS Price Change

Name Before dividend After On Ex- After Ex-

Date dividend dividend
Date Date
1. NABIL 1660 2005/11/30 1645 -10 -15
1650

From the above table we see that MPS of the who declared the cash dividend
has declined on the ex-dividend date during the fiscal year 2014/15. The large
amount loser company was NABILwith the MPS decline of Rs. 15. The MPS
of NABIL was seen decreased by Rs. 10 on the ex-dividend date.

Fig 3 Price Effect after Cash Dividend Payment on 2014/2015

1800
1600
1400
1200
1000
800
600
400
200
0
Mps before Mps after ex dividend before ex dividend after
-200

Series 3

For the Fiscal Year 2015/16

Table no. 4.5

S. No. Company MPS MPS on Ex- MPS Price Change

 18

Name Before dividend After On Ex- After Ex-

Date dividend dividend
Date Date
1. NABIL 2312 2006/10/22 2320 +28 +8
2340

From the above table we see that MPS of the who declared the cash dividend
has declined on the ex-dividend date during the fiscal year 2015/16. The large
amount loser company was NABILwith the MPS decreased by 8. The MPS of
NABIL was seen increased by Rs. 28 on the ex-dividend date.

Fig 4 Price Effect after Cash Dividend Payment on 2015/2016

2500

2000

1500

1000

500

0
mps before mps after ex dividend before ex dividend after

Column1

For the Fiscal Year 2016/17

Table No. 4.6 Price Effect after Cash Dividend Payment on Fiscal Year
2016/17
 19

S Company Name MPS Ex-dividend MPS Price Change

No Before Date After On Ex-dividend After Ex-

Date dividend Date
1. NABIL 4770 7-Oct-07 4285 -139 -485
4631

From the above table we see that MPS of the who declared the cash dividend
has declined on the ex-dividend date during the fiscal year 2016/17. The large
amount loser company was NABILwith the MPS increased by 485. The MPS
of NABIL was seen decreased by Rs. 139 on the ex-dividend date.

Fig 5 Price Effect after Cash Dividend Payment on 2016/2017

6000

5000

4000

3000

2000

1000

0
mps before mps after before ex dividend after ex dividend
-1000

4770
 20

CHAPTER 5

DISCUSSION

5.1 Summary of Findings

After the restoration of democracy in 1990 A.D., Nepal has implemented liberal
economic policy. As a result, many more companies are established in different
sectors such as industrial, tourism, transportation, trade and mostly in financial
sector who contribute to build up economy of the country. Nepal is a country trying
to develop its economy through global trend and cooperation with developed
countries.

Shareholders make investment in equity capital with the expectation of making

earning in the form of dividend or capital gains. High payout satisfies the dividend
need whereas increase in market price of stock increases capital gain. Therefore,
firm should make a proper balance between dividends and retained earning.

Dividend distribution is the very important factor to any organization for effective
goal achievement to satisfy the shareholders. Dividends are decided upon and
declared by board of directors. A firm’s profits after-tax can either be used for
dividends payment or retained in the firm to increase shareholders' fund. This may
involve comparing the cost of paying dividend with the cost of retaining earnings.

Actually, paying dividend to shareholders is an effective way to attract new

investors to invest in shares. Due to decision of earnings of a company between
dividends payout and retention of earnings of a company between dividend pay out
and retention of earnings, its effect on market value of shares is a crucial question.
So, a wise policy should be maintained between shareholders’ interest and
corporate. The funds sometimes could not be used in case of lack of investment
 21

opportunities. In such a situation distribution of dividend to shareholders is taken as

the best because shareholders may have investment opportunities to invest
elsewhere.

In Nepal there is more practice of cash dividend and stock dividend. The payment of
cash dividend by the financial institutions especially by banks is seen well than
other sectors.

Thus, the study attempts to determine the impact of cash dividend on stock price.
For this whole purpose different descriptive, financial and statistical analysis was
done using various methodologies.

Under the empirical testing it has been proved that ex-day stock price tend to fall by
significantly less than the dividend. They interpret this result as consistent with a
clientele effect where investors in high tax brackets show a preference for capital
gains over dividends and vice versa. Another study examining the ex-dividend day
behavior of American Telephone and Telegraph stock for a time series of 43
consecutive dividends has found that the average price change from the cum-
dividend day to the ex-dividend day was $2.16, or about 4 percent less than the
$2.25 dividend.

But in Nepalese perspective the MPS of certain financial institutions is seen

increased heavily on and after ex-dividend date.
 22

5.2 Conclusions

From the study we find out that mainly the commercial banks of the Nepal are
regular paying dividend. Being an “A” class financial institution

 The companies paying the cash dividend are not paying consistently.
 There is a very low degree of positive correlation between total listed
companies and cash dividend paying companies. We have also found that
the most of the companies are paying cash dividend and bonus share.
 There is no significant difference between the average MPS before and after
the cash dividend payment of commercial banks, development banks and
finance company.
 23

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 24

Foong, S. S., Zakaria, N. B. & Tan, H. B. (2007). “Firm performance and dividend
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business & finance. Vol. 5, pp. 97-111.

Gitmen, L. J. (2000). Principles of Managerial Finance. New Delhi:

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Pandey, I.M. (2002). Financial Management. New Delhi: Vikas

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Uddin, Md. H. (2003). “Effect of Dividend Announcement on Shareholders’

Value: Evidence from Dhaka Stock Exchange.”

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Weston, F. J. & Copeland, T. E. (2001). Managerial Finance. New York: The

Dryden Press.

Wolff, H. K. & Pant, P. R. (2005). Social Science Research and Thesis Writing.
 25

APPENDIXES

Dividend Announcement

Name of Listed Dividend in

Company (%)

Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14

COMMERCIAL BANK

Cash Cash Dividend Cash Dividend Cash Cash Dividend

Nabil Bank Ltd. Dividend 50 65 70 Dividend 85 100

Bonus Share 40
26
 27

APPENDIXES

Dividend Announcement

Name of Listed Dividend in

Company (%)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14

COMMERCIAL BANK

Cash Dividend
Nabil Bank Ltd. Cash Dividend 50 Cash Dividend 65 Cash Dividend 70 85 Cash Dividend 100

Bonus Share 40
28
xxix