ACCOR Dividend Policy

Dividend policy

Dividends paid to stake holders over the past five years.

For the year 2009 the dividend paid was €1.05 per share, € 0.62 per share dividend was proposed in 2010 but no interim dividend was paid in that year. For the year 2011 dividend paid was €1.15 per share. This included special dividend of 0.50 (, 2014). In 2012 dividend was € 0.76 per share. For the 2013 the Ordinary dividend per share was €0.80 on 50 % pay-out ratio. This dividend was subject to approval by shareholder at the Annual General meeting on 29th April 2014. The total ordinary dividend was €183 million (ACCOR, 2014). The table below shows the number of shares and dividend paid during the five years.

Shares (€) with dividends right

Dividend paid in (€) per share






Table 1: dividends (, 2014)

Case study project (Accor Hotel)

Figure 1: Net Dividend (, 2014)

Dividend of the year 2013 was payable entirely cash or in half in cash and half in stock at 10 % discount. This was after approval at the Annual Meeting

Description of the company’s dividend

Lease, (2000) argue that dividend policy is set of practices adopted by management of an organisation when making decisions on dividend pay-out in terms of distributing cash within the stipulated time. The dividend policy of the ACCOR company is managed by the Board of members who make decisions on in respect to the law on matter of dividends such not paying dividends out of capital, and dividend should not be paid when the company is in financial problems just like what happened in 2010 where the company did not pay any dividends at all.

Mechanism of cash payment

The dividend policy employs the mechanics of cash payment properly this is because there is a declaration date which is the date the Board meet and declare the dividends, date of record which is the date the register of shareholders is closed after the trading day, all the shareholders listed in the register receive the dividends payment. Ex-dividend date common shares of the firm reflect the payment of the dividend that is fall in value and date of payment of dividends is done this occurs at a period of two days prior to the date of record. Here date of payment, the amount of dividend for each share is finalised. It is the date the cheques issued to shareholders (Saravan, 2010). The company’s shareholders meeting in April of every financial year to discuss the dividends of the previous year is acceptable. The stake holders review the proposed dividends proposed in the previous year and come up with a final figure.

Dividends types

ACCOR Company pays the dividends through Euroclear France. The company dividends are in cash that is per amount shares held. Payment of the dividends is either 100% cash or 50% cash and 50 % shares. The use of cash payment of dividend to shareholders allows them to have an option of using the cash and buy more shares under dividends reinvestment plan. The stock dividend payment method the company uses has some implication in that it reduces the capacity of the company to pay future dividends and the wealth of the shareholders in unaffected. The effect the company notices or experience is that there is retained on cash conservation. This method also lowers the market value of the company’s stock, it promotes distribution of shares widely, and it brings adjustments to the capital accounts. To the shareholders the method implies that the proportion of ownership and the total value of holding remains the same, (Saravan, 2010). Forfeiting of dividends, the dividends that stay up to five years without being claimed are forfeited as the law stipulates (ACCOR, 2014).

Changes to the company dividend policy

It important to for companies to be keen in dividend policy since this the important financial decisions that is encountered by manager since it has greater effect prices of shares and return to investors and financial growth (Murekefu, 2012) .It is noticed in the years 2006, 2007 dividend were 2.95 and 3.15 respectively the effect of this on the share price were appealing at 58.70 in 2006 and at 54.70 in 2007. This showed that the increase in dividend increased the price of shares. Employing a hypothesis called Bird-in-the-hand hypothesis which looks at the increase in dividends paid as having a positive value to the company by increasing the firm value (Al-Malkawi, Rafferty & Pillai, 2010). It however important to keep the M & M proof of irrelevancy hypothesis in mind. Which points out that the investment the company makes is the determinant of the value the company will attain and not the dividend policy. The flow of cash from investment is the primary determinant of the company’s value. Other changes to the dividend policy are the removal or rather extending the period in which the unclaimed stock are forfeited. In my own opinion this will improve the relationship between the company and the shareholders

Paying much concern on the Pay-out ratio is not important. The companies which do concentrate on this do not do well. This is because this ration does not really have effects on the growth of the company earnings. It is important however to concentrate on the on ways of improving the cash per share and improving the book value since the two have effect on the growth and the pay-out ratios (Al-Twaijry, 2007).

Include in the dividend policy assumptions concerning the company’s future investment, maintenance of liquidity issues to do with cost of capital or expectation of the investor and division of profits. Company dividend policy need to show the balance that exists between the ability of the company to reinvest profits (Jabłoński, 2012). Incorporate the other form of dividends such as property and use stock splits at some point depending on how the company is performing. The stock splits intend to decrease the share price resulting in number of shares and do not affect the shareholders wealth. The reason s for this method is because there will be better share price of trading and it is appealing (Saravan, 2010).


ACCOR, (2014). 2013 Results (1st ed.). Retrieved from,. (2014). Dividends. Retrieved 11 May 2014, from

Al-Malkawi, H., Rafferty, M., & Pillai, R. (2010). Dividend policy: A review of theories and empirical evidence. International Bulletin Of Business Administration, 9, 171—200.

Al-Twaijry, A. (2007). Dividend policy and payout ratio: evidence from the Kuala Lumpur stock exchange. Journal Of Risk Finance, The, 8(4), 349—363.

Jabłoński, B. (2012). The Influence of Dividend Policy on the Efficiency of Investments on the Polish Capital Market.

Lease, R. (2000). Dividend policy (1st ed.). Boston, Mass.: Harvard Business School Press.

Murekefu, T. (2012). The relationship between dividend pay-out and Firm performance: A study of listed companies in Kenya. European Scientific Journal, 8(9).

Saravan,. (2010). Dividend policy. Presentation.