Dividend Per Share for Panasonic from Financial Reports from 2013 to 2017

After analyzing dividend per share for Panasonic from financial reports from 2013 to 2017, I have found out that the selected dividend policy for Panasonic Manufacturing Malaysia Berhad is irregular dividend policy as no matter the earning for the company is up or down, shareholder will eventually receive an irregular dividend. Those company practice this type of dividend policy may be due to certain reason such as uncertain profit of the company, afraid of paying regular dividend or not so much successful business.

There are a few determinants of the selected company’s dividend policy. The first determinant is signaling effect which dividend are perceived by investor of company’s future prospects. When the company announced high dividend payout that indicate the positive future prospect of the company. On the other hands, once the company declared decrease in the dividend payout that investors may worry about the performance of the company as well as the future prospect. Studies show that there are positive reaction for dividend increase and negative one to dividend decrease. Besides, market reaction is more sensitive to dividend decrease compared to increase (John, K. and J. Williams, 1985). Although Panasonic is practicing the irregular dividend policy, the signaling effect will also take place due to reputation and high DPS in certain year for example, there is three consecutive years paid for high DPS. In this situation, investors would likely perceive that they will also receive a high dividend paid from the investment.

Besides that, growth decision is also one of the significant factor that affect company selected dividend policy. The growth of company is reflected in their annual sales growth and retained earnings as company need fund available for expansion. According to chairman’s statement, Panasonic is committed to expand its fan business to be global product development and also manufacturing based factory. For the reason, company retained about half of the profit in that year in order to expand the business thus only net dividend paid for the shareholder was sharply declined compared to previous year.

 Liquidity condition should be taken into consideration while deciding the dividend policy. As the company decided to pay cash dividend, there is an outflow of cash. Somehow, there are some company earn sufficient income or profit but lack of cash to pay out dividend. Based on financial data from The Wall Street Journal, Panasonic is maintaining a healthy level of net operating cash flow of RM172,498,000. Therefore it indicates the liquidity condition for the company is relatively healthy. In 2014, the cash outflow was higher than the cash inflow due to Panasonic spent much on their inventory thus the dividend payout for that year was quite low due to low liquidity condition.