Abstract

Oracle Financial Software Services (OFSS), a subsidiary of multi-national technology company Oracle Corporation, announced an annual dividend of Rs.100 per share on a share of face value Rs.5 in May 2016. After the dividend was announced, the share price dropped. In the previous financial year, the dividend was Rs.180 excluding an interim dividend of Rs.485. The drop in share price after paying the dividend made the company wonder if it was due to the lower divided paid during the year. At the same time, other companies in the technology sector were paying consistent dividends. OFSS needed to decide on the dividend to be paid for the next financial year.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Identify the factors determining the dividend policy of a firm
• Understand Walter’s dividend model
• Understand the criticisms leveled against Walter’s model

Keywords

Oracle Financial Software Services , Oracle Corporation, Dividend Policy, Walter’s Model, Dividend Payout, Cost of Capital, Rate of Return, Dividend per share, Earnings per share