Literature review

Research paper :1 Wealth and risk from leverage stock portfolio. Prepare by: Dale l. domain ,marie d.racine Little attention has been given in the academic literature to investment strategies using leveraged portfolios. Among the few published studies,grauer and hakamsson (1985,1986)apply multi-period portfolio theory to the constriction and rebalancing of portfolio. One method of introducing realistic portfolio characteristics is to use observed capital market history. Although this has not been done for leverage portfolio. We can apply the resembling technique use by bulter and domain for unlevered portfolio Research paper :2 The Passive Stock Market Portfolio is Highly Inefficient for Nearly All Investors We develop and implement portfolio efficiency tests based on generalized stochastic dominance rules that limit the intensity of risk aversion. The tests avoid the violations of non-satiation that plaque the mean-variance criterion and the lack of discriminating power of the standard second-order stochastic dominance rule. Our empirical analysis shows that the broad stock market portfolio is highly inefficient for nearly all investors relative to active stock portfolios formed on market capitalization, book-tomarket ratio and price momentum. For long investment horizons, second-order stochastic dominance underestimates the pricing errors by assigning extremely large weights to bear markets, hence overemphasizing the left tail of the market return distribution. Similarly, mean-variance analysis underestimates the pricing errors, because it assigns negative weights to bull markets, placing a penalty on the right tail of the distribution. It appears impossible to rationalize the passive market portfolio for any horizon without assuming implausible values for relative risk aversion. Research paper :3 Stakeholders, Shareholders and Wealth Maximization V. Sivarama Krishnan, University of Central Oklahoma

This paper attempts reconciliation between the two somewhat extreme views espoused by the shareholder wealth maximization paradigm and the stakeholder theory. The stakeholder theory challenges the basic premise built into corporate finance theory, teaching and practice. Corporate finance theory, teaching and the typically recommended practice are all built on the premise that the primary goal of a corporation should be shareholder wealth value maximization. Extant theoretical and empirical research in financial economics also generally accept shareholder wealth maximization as the normative and ideal goal on which all business decisions should be based. This paradigm assumes that there are no externalities and all the participants engaged in transactions with the firm are voluntary players competing in free, fair and competitive markets. A very different view is offered by what is loosely called stakeholder theory. The stakeholder theory posits that the focus on shareholders and firm value is misplaced and managers should be concerned with all stakeholders of the firm. The paper attempts to address what is felt as a lack of dialogue between the two camps. Research paper :4 The Impact of Dividend Policy on Shareholders Wealth R. Azhagaiah Faculty Member, Department of Commerce Kanchi Mamunivar Centre for Post Graduate Studies (Autonomous) (Govt. of Puducherry) Affiliated to Pondicherry Central University Puducherry 605 008, South India E-mail: drrazhagaia@ yahoo.co.in Tel: ++91-0413 2255017; Fax: ++91-0413-2251687 The present paper is aimed at analyzing the impact of dividend policy of shareholders wealth in Organic and Inorganic Chemical Companies in India during 1996 1997 to 2005-2006. To measure the impact of dividend policy on shareholders wealth multiple regression method and stepwise regression models are used by taking DPSit(Dividend per Share), RE it (Retained Earnings per Share), Pet-1 (Lagged Price Earning Ratio) and MPSit-1 (Lagged Market Price) (MVit-1) as independent variable, and MPSit(Market Price Per Share) as dependent variables. To determine the proportion of explained variation in the dependent variable, the co-efficient of determination (R2) has been tested with the help of F value. The study proves that the wealth of the shareholders is greatly influenced mainly by

five variables viz., Growth in sales, Improvement of Profit Margin, Capital Investment Decisions (both working capital and fixed capital), Capital Structure Decisions, Cost of Capital (Dividend on Equity, Interest on Debt) etc. There is a significant impact of dividend policy on shareholders wealth in Organic Chemical Companies while the shareholders wealth is not influenced by dividend payout as far as Inorganic Chemical Companies are concerned.