4. Macroeconomic Conditions:
-Stable:
Positive: Investors tend to take more risks.
Neutral: Investors continue to reassess the intrinsic value of stocks.
-Unstable:
Negative: Investors tend to be more cautious.
Neutral: Investors continue to reassess the intrinsic value of the stock but with more caution.
Of all these, dividends will also be canceled, and this will also cause a reaction for investors.
In general, dividend cancellation announcements by companies will have a negative impact on the market. This is because investors will be disappointed at the prospect of receiving lower earnings from their investment.
The following are some of the possible consequences:
1. Decrease in Share Price:
Investors sell their shares because they no longer expect dividend income.
Massive share sales lead to a decline in share prices.
2. Increase in Trading Volume:
Investors who are disappointed with the dividend cancellation may sell their shares quickly.
This leads to an increase in the trading volume of the stock.
3. Loss of Investor Confidence:
Cancellation of dividends may undermine investor confidence in the company.
Investors may no longer be interested in investing in the company.
4. Negative Impact on Company Reputation:
Cancellation of dividends can tarnish the company's reputation.
This may make it difficult for the company to raise funds in the future.
FACTORS AFFECTING DIVIDEND POLICY IN MANUFACTURING COMPANIES
Dividend policy is the company's decision regarding how much profit will be distributed to shareholders in the form of dividends, and how much will be retained to reinvest in the business.
In manufacturing companies, some of the main factors that can affect dividend policy include:
