The use of fair value and its potential effects on dividends

Abstract: Title: The implementation of IFRS and the effects on dividends. Seminar date: 2013-05-30 Course: BUSN69.Degree project-Accounting and auditing, 15 ECTS credits Authors: Henrik Alwén and Johan Rybäck. Supervisor: Kristina Artsberg. Key words: Divided policy, earnings, fair value, gross profit, IFRS. Purpose: The purpose with this thesis is to analyze whether the implementation of IFRS have impacted the dividend payout from real estate companies. There is limited previous research regarding whether the implementation has had any impact on companies´ dividend payout, and we would like to contribute to the research field with a research regarding if changes in dividend payout can be connected to the implementation of IFRS. Methodology: We have combined a quantitative and a qualitative approach to answer the purpose. We have looked at the actual dividend, the dividend policy and comparing the actual dividend with four factors, for Swedish public listed real estate companies´ from 2003 to 2011. We will also make interviews with representatives from our investigated companies. Theoretical Perspectives: Within the theoretical framework, we will first present articles regarding dividend payouts and the reasons behind. We will present advantages and disad-vantages of using fair value. In the end of the theoretical framework, we present an investiga-tion, which investigate the effects the use of fair value has on dividend payouts. Empirical Foundations: In this chapter we will present the quantitative material, and the answers we have received from the interviewed. Conclusion: We believe that the use of fair value for investment properties hasn’t impacted the actual dividend payout. However, we have found that the use of fair value had impact the dividend policy. When the dividend policies have been adjusted for unrealized gains that oc-cur from the use of fair value, the actual dividend payout isn’t impacted by unrealized gains. The reason to this, we believe is a combination between knowledgeable investors and power-ful creditors.