Impact of Covid-19 pandemic on the dividend decision of companies

Programme: Business with Financial Management/Business Management (Finance Pathway)/ International Banking and Finance/Banking and Finance/ Accounting and Finance/Combined Business Credits and as applicable.
Module Code:  
Module Title: International Finance and Responsible Financial Management
Distributed on: For immediate release
Submission Time and Date: For 2021/22 academic year
Word Limit: Academic Essay of 1500 words supported by 3 blog appendices of no more than 700 words each
Weighting This coursework accounts for 100% of the total mark for this module
Submission of Assessment  

 

 

Instructions on Assessment:

 

This assessment is made up of an academic essay of 1500 words supported by 3 blog appendices (700 words each).

 

Academic Essay – The creation of shareholder value – The Impact of the Global Covid-19 Pandemic on Corporate Finance.

 

(1,500 words excluding Blogs)

 

The following are extracts from the financial press:

 

Income investors wondering how fast their dividends might recover from the pandemic may not have to wait much longer for good news. The rate of decline in UK payouts fell in the three months to March to its lowest quarterly rate since Covid-19 first struck, according to Link Group, an investor services company.  The headline figure — a 26.7 per cent drop — hardly looks reassuring. But the rate of decline has been shrinking quarter by quarter since the 48.2 per cent plunge in the dire days of April to June last year. Link forecasts increases from now on, predicting a 5.6 per cent rise in underlying dividends, excluding special payouts, over 2021.  Over the 12 months to March, covering the period since the pandemic hit the UK, dividends dropped 41.6 per cent, as two-thirds of companies cancelled or reduced payouts. Investors altogether lost £44.8bn, Link said, with 30 per cent coming from oil groups. But even in tough conditions, there were some dividend winners. Food retailers raised payouts 22 per cent, led by Tesco. Consumer basics, headed by Unilever and Reckitt Benckiser, also posted dividend increases over April 2020 to March 2021. “The outlook is brightening,” Link said. “Banking dividends are returning, though at low levels and there are positive signs from miners, insurance and media companies.” David Smith, fund manager of Henderson High Income Trust, agreed. “While the last year has been painful for income investors, we can now look forward to aggregate dividends growing from their lowered base,” he said.

 

(FT.com ‘Glimmer of hope in U.K Dividend drought’, April 28th 2021)

 

Panasonic is paying $7.1bn to acquire US supply chain software company Blue Yonder in a deal that highlights the changing global business environment of the pandemic and a resurgence of overseas acquisitions by Japanese companies. Under the agreement announced on Friday, Panasonic will build on the 20 per cent stake it acquired in Blue Yonder last year. It will buy the remainder of the company from private equity groups Blackstone and New Mountain Capital in a deal that, including debt, values the target at $8.5bn. The US group’s enterprise value has jumped from $5.5bn a year ago as supply chain disruptions during the pandemic boosted demand for software that helps companies manage logistics and shipping. Earlier this month, Blue Yonder revealed that it was preparing to go public after filing paperwork with the Securities and Exchange Commission. For Panasonic, the deal will allow it to combine Blue Yonder’s software with its traditional business of selling hardware such as security cameras. It will be the group’s biggest overseas acquisition and the first under its new chief executive Yuki Kusumi, who took up the post this month… The pandemic, which limited international travel and made hands-on due diligence more difficult, caused a sharp slowdown in outbound deals in 2020. But in the first quarter of 2021, said Bank of America analysts in a note this week, Japan’s overseas dealmaking staged a surprise resurgence. Companies collectively undertook $29bn in cross border M&A, the highest January to March figure of recent years, involving a near-record high of 110 deals.

 

(FT.com Panasonic to pay $7.1bn for supply chain software Blue Yonder, April 23rd 2021)

 

 

Requirement

You are, in an academic essay format (70% of marks), required to answer one of the following two tasks.

 

Task 1: You are to critically evaluate the literature on Dividends and Dividend Policy and using examples from the financial press, assess the impact of the Covid-19 pandemic on the dividend decision of companies throughout the different phases of the pandemic. You are to reach a conclusion as to whether dividend policy has a substantive impact in the creation or destruction of shareholder wealth.

 

Personal Note: Companies must keep their eyes on shareholder dividends but as the same time invest in tech innovation and investing into the company as they both create value – assess the impacts of both

 

Task 2: You are to come to conclusion, supported by the academic literature, as to the ability of managers to value companies in the context of the global Covid-19 pandemic and to create shareholder value by engaging in merger and acquisition activity. You should make reference to current examples of merger and acquisition activity from the financial press.

 

Guidance Notes:

 

  • You are expected to use strong and reputable business news sources such as the Financial Times and Bloomberg to read around and develop your understanding of the cases you use.
  • You may use the companies mentioned in the above extracts as a starting point, but you should widen your research to include other examples to support your arguments. You are not limited to the U.K for examples.
  • Your answers should focus specifically on the impact of the covid-19 pandemic on companies. This theme runs through the assessment. Therefore you should use the academic literature to support your arguments but should not expect to gain information about the global pandemic from the literature. You are strongly encouraged to use real-world examples from different phases of the pandemic.

 

Your answers should specifically be written in an academic essay format and not in the format of a business report. Essays specifically should not include headings, section headings, etc. Your essay should concentrate particularly ensure that there is considerable flow and cohesion between the paragraphs. It is advised that you make good use of the writing support materials on the Blackboard site. Specifically all students will benefit from reading through the following guidance on essay writing:

 

https://writingcenter.fas.harvard.edu/pages/overview-academic-essay.

 

 

Blog Appendices

 

(30% of Marks; 10 marks per blog)

 

  1. This essay is to be supported by three blog appendices. Students should write blogs to cover topics related to each of three out of the four syllabus areas covered in the module (creating value, core concepts of corporate finance, financial investment, financial ethics). Students will receive a maximum of 10 marks for each Blog post submitted (30 marks total). Blog posts do not have to be about the pandemic and can be on any contemporary issue. Students are encouraged to complete blogs throughout the semester although these are submitted during the assessment period.

 

  1. Each of the three Blog posts should reflect on a real-world contemporary issue (please ensure your blogs are current). Students should demonstrate their ability to apply theory to real world cases and reflect on what they are being taught in seminars, lectures and through the directed reading relates to the real world which they are discussing. Good Blog posts would be in-depth, considered, and displaying a mature ability to analyse, disseminate and discuss. Poor Blog posts are descriptive in nature and display only a surface appreciation of the issues. The maximum word length is 700 words per blog.

 

  1. It is advised that students use a free Blog service like Google’s Blogger. Students are not restricted to Blogger and may use any blogging service.

 

  1. Students may design their Blog how they wish, however it is requested that they both refrain from links to unsuitable websites and that they remember the university’s internet usage policy when posting and designing their blogs.

 

  1. Be creative and don’t view this as a chore or requirement. Try and take time rather than rushing this. The Blog is marked on depth of reflection and consideration. Remember that deep and considered blog posts will allow you to evidence more and maximise your “critically assess” and “critically analyse”

 

  1. Bring in contemporary issues or things happening that week in the news. Use the Blog to display what you’ve been reading about. Perhaps before blogging have a search through the Financial Times for that week or have a read of what other top business journalists are talking. Try and make your blog posts as contemporary and timely as possible to maximise marks. Don’t Blog about something what happened last year, Blog about things happening now, and things you may want to talk about in interviews with future employers.

 

 

 

Word limits and penalties

 

If the assignment is within +10% of the stated word limit no penalty will apply.

 

The word count is to be declared on the front page of your assignment and the assignment cover sheet.  The word count does not include:

 

·       Title and Contents page ·       Reference list ·       Appendices ·      Appropriate tables, figures and illustrations
·       Glossary ·       Bibliography ·       Quotes from interviews and focus groups.

 

Please note, in text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib-dab nonsense analysis” (Smith, 2011 p.123)] are INCLUDED in the word count.

 

If this word count is falsified, students are reminded that under ARTA this will be regarded as academic misconduct.

 

If the word limit of the full assignment exceeds the +10% limit, 10% of the mark provisionally awarded to the assignment will be deducted.  For example: if the assignment is worth 70 marks but is above the word limit by more than 10%, a penalty of 7 marks will be imposed, giving a final mark of 63.

 

Students must retain an electronic copy of this assignment (including ALL appendices) and it must be made available within 24hours of them requesting it be submitted.

 

Note:    For those assessments or partial assessments based on calculation, multiple choice etc., marks will be gained on an accumulative basis.  In these cases, marks allocated to each section will be made clear.

 

 

 

 

 

Module Learning Outcomes (MLOs)

 

What will I be expected to achieve?

(SRS 0005)

 

Knowledge & Understanding:

 

  • You will be able to come to reasoned, critical judgements regarding the impact of financing and dividend decisions on shareholder wealth with an ability to contrast theory from practice. [LO1]

 

  • You will be able to propose justifiable, sustainable and responsible solutions, based on your critical evaluation of empirical academic evidence, to complex real world financial problems. [LO2]

 

Intellectual / Professional skills & abilities:

 

  • You will be able to display developed reflection and critical analysis skills through exploring financial practice and real world financial decisions.[LO3]

 

Personal Values Attributes (Global / Cultural awareness, Ethics, Curiosity) (PVA):

 

  • You will be able to critique the codes of conduct that finance professionals are governed by, and be able to evaluate dilemmas that responsible businesses face when making financial decisions with complex consequences. [LO4]
Programme (Level) Learning Outcomes that this module contributes to:

 

Knowledge & Understanding:

 

  • Assess knowledge of contemporary professional practice in business and management informed by theory and research. [6.1.1]

 

  • Appraise knowledge of business and management to complex problems in professional practice in order to identify justifiable, sustainable and responsible solutions [6.1.2]

 

 

Intellectual / Professional skills & abilities:

 

  • Critique creative and critical thinking skills that involve independence, understanding, justification and the ability to challenge the thinking of self and others [6.2.2.]

 

Personal Values Attributes (Global / Cultural awareness, Ethics, Curiosity) (PVA):

 

  • Critique their personal skills and attitudes for progression to post-graduate contexts including professional work, entrepreneurship and higher level study [6.3.2]

 

 

 

Module Specific Assessment Criteria

The first column indicates the general assessment criteria used within NBS the second column indicates the specific criteria used when marking your assessment.

Mark General Criteria Module Assessment Criteria
First
(80 – 100)
Exceptional scholarship for subject.  Outstanding ability to apply, in the right measure, the skills necessary to achieve highly sophisticated and fluent challenges to received wisdom. Essay is cohesive and displays well the student’s exceptional independent studies and research, with extensive citations throughout displaying clear depth of knowledge. Answer displays well students ability to comprehend that finance is an inter-linked subject and how that value, and the concept of how value is created, is a combination of the different attributes which we examine of the course including the creation of value though dividend policy or mergers and acquisitions.  Students answer is fluent and displays a depth understanding. Exceptional evaluation of the impact of the covid-19 pandemic on companies that focuses on different stages of the pandemic.

Blogs are insightful and reflective and provide exceptional ability to consider how real world examples can be related to theory. Blogs are extremely well written. Blogs show evidence of deep thinking and portray ideas in an original and engaging way.

First
(70 – 79)
Knowledge and understanding is comprehensive both as to breadth and depth.  A mature ability to critically appreciate concepts and their inter-relationship is demonstrated.  Clear evidence of independent thought.  Presentation of work is fluent, focused and accurate. Essay is cohesive and displays well the student’s excellent independent studies and research, with extensive citations throughout displaying some depth of knowledge. Answer displays some appreciation of  finance as an inter-linked subject and how that value, and the concept of how value is created, is a combination of the different attributes which we examine of the course including the creation of value though dividend policy or mergers and acquisitions.  Student’s answer is fluent and well written including an excellent evaluation of the impact of the covid-19 pandemic on companies that focuses on different stages of the pandemic.

Blogs are insightful and reflective and provide excellent ability to consider how real world examples can be related to theory. Blogs are very well written. Blogs may lack some evidence of depth but are still very engaging.

Upper Second (60 – 69) Knowledge base is up-to-date and relevant, but also may be broad or deep.  Higher order critical appreciation skills are displayed.  A significant ability to apply theory, concepts, ideas and their inter-relationship is illustrated. As above but literature used is from relevant journals (journal of finance etc) but use of literature to reinforce points isn’t as coherent or cohesive as it could be. Student displays analytical skills well when evaluating value, but there lacks fluidity in the writing and an ability to display a depth of appreciation of the inter-related nature of the concept of value. There is likely to be less differentiation between stages of the pandemic but nonetheless the application is very good.

Blogs show some good evidence of the ability to critically evaluate but there may be some elements of the blogs that are descriptive in nature. There are examples of real-world application that are well used.

Lower Second (50 – 59) Sound comprehension of topic.  Reasoning and argument are generally relevant but not necessarily extensive.  Awareness of concepts and critical appreciation are apparent, but the ability to conceptualise, and/or to apply theory is slightly limited. Student clearly is able to show what value is, and displays a sound ability to apply many of the main concepts surrounding value in corporate finance to the assignment, but analytical and ability to critically evaluate is largely missing. Student’s answer uses the Literature recommended on the teaching and learning plan, but seldom goes beyond this, or alternatively, the literature they do rely on to support their claims is not of a high quality.

Blogs are fairly well written but tend to be largely descriptive as opposed to reflective and evaluative. Reference to real-world examples may be limited but still some evidence of having researched real-world examples is expected.

Third
(40 – 49)
Knowledge is adequate but limited and/or superficial.  In the most part, description/assertion rather than argument or logical reasoning is used.  Insufficient focus is evident in work presented. Student acknowledges what value is in corporate finance, but answer lacks evidence of an ability to display good analytical critical thinking skills or apply this to the specific issues or to make use of examples to illustrate points being made. Answer is somewhat one-dimensional at times, lacking depth and evidence of reading beyond the teaching and learning plan.

Blogs are poorly written and are largely descriptive as opposed to reflective and evaluative. There may be content which is dated. There is likely to be no reference to real-world examples.

 

(30 – 39) Minimal awareness of subject area.  Communication of knowledge frequently inarticulate and/or irrelevant. Students answer is descriptive of what value is in corporate finance and lacks evidence of critical analytical ability. Answer probably lacks any semblance of coherence and fluidity and probably relies of definitions etc. Possibly literature is used to evidence academic research, but “patch-writing” or similar may be evidenced.

Blogs are poor in content and style and some may be missing.

(0 – 29) Poor grasp of topic concepts or of awareness of what concepts are.  Failure to apply relevant skills.  Work is inarticulate and/or incomprehensible. See general guidelines.

 

 

 

 

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