Dividends in a Real world Setting.

In the Wall Street Journal on 9 June 2010 in an article titled BP Should Resist Slashing Dividend, Liam Denning noted that BP were under pressure to reduce their dividend payout and perhaps even omit paying a dividend altogether as a result of the oil spill in the Gulf of Mexico. Subsequently BP announced that it would cut its dividend. Under certain assumptions it may be shown that paying a dividend doesn’t make shareholders any better or worse off. Carefully examine why the reduction in or omission of BP’s dividend may harm shareholders. You will need to ensure that your examination clearly identifies which assumptions from theoretical models may be violated in this instance. Simply stating that the models are wrong is inadequate. Also, your examination should incorporate all of the more recent evidence with respect to the dividend decision. Looking for the best essay writer? Click below to have a customized paper written as per your requirements.