Abstract

American consumer durable company The Whirlpool Corporation operated in India as Whirlpool of India (Whirlpool). The Board of Directors (Board) of Whirlpool had not paid any dividend since it went public in the early 2000s. In the year 2015-16, the Institutional Investors Advisory Services organization (IiAS), an advisory of financial market participants, pointed out that Whirlpool had not paid dividends and alleged that it was utilizing the cash for other purposes. The Board was of the opinion that its retention policy was in line with shareholders’ interests and expectations. Also, in the policy document submitted on dividend distribution in compliance with the “Listing Regulations” notified by SEBI (Securities and Exchange Board of India, the regulator for the securities market in India), the Board clearly specified that its first priority was to utilize the profits to meet the capital expenditure requirements and to earmark the cash to meet potential inorganic growth opportunities.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Apply MM-hypothesis to a company
• Analyze Whirlpool’s Dividend Policy using MM-hypothesis

Keywords

Dividend Distribution Theories, Modigliani and Miller (MM) Hypothesis, Dividend Payment, Dividend Retention , Whirlpool of India , Whirlpool Corporation, Whirlpool of India Dividend Distribution Policy, Institutional Investors Advisory Services Limited, Whirlpool of India Dividend Payout , Whirlpool of India share price