Dividend Policy Simulation

• Analyze quarterly earnings and cash flows

• Review capital expenditure and debt obligations

• Choose between dividend options: increase, decrease, suspend, or maintain

• Consider issuing share buybacks as an alternative

• Evaluate the long-term financial sustainability of their policy

• Monitor investor sentiment and stock price reactions

• Justify decisions to the board, analysts, and shareholders

• Adapt to external shocks such as recession, litigation, or windfall profits

Each round brings new data and context, pushing participants to re-evaluate and iterate their strategy.

By the end of the simulation, participants will:

• Understand how dividend policies are formed and evolve

• Evaluate the trade-offs between investor expectations and capital needs

• Respond to market sentiment and communicate policy decisions effectively

• Analyze financials to determine feasible and sustainable payouts

• Consider tax and signaling implications of payout decisions

• Explore the lifecycle of a firm and its dividend policy alignment

• Justify dividend actions to multiple stakeholders with different goals

• Navigate external pressure from activist investors or analysts

The simulation is ideal for students studying corporate finance, investor relations, or capital markets - and for early-career professionals preparing for real-world financial decision-making.

1. Review Company Performance Participants receive financial statements, strategic priorities, and capital forecasts.

2. Choose a Dividend Strategy They select a policy approach or make specific dividend payout decisions for the quarter.

3. Model Financial Implications Participants analyze cash flow impacts, debt capacity, and reinvestment trade-offs.

4. Monitor Stakeholder Reactions Market feedback, shareholder sentiment, and analyst coverage reflect the results of their actions.

5. Communicate Decisions Participants write or present a rationale for their decisions to the board, investors, or the media.

6. Adapt Over Time New events (e.g. macro shocks, profit windfalls, investment opportunities) change the game in future rounds.

• Do participants need prior finance knowledge? A basic understanding of cash flow and capital structure is helpful but not mandatory.

• Does the simulation include tax impacts? Yes. Scenarios can include dividend tax regimes and investor type differences.

• Can this be run for corporate finance workshops and courses? Yes. It’s ideal for both academic and professional settings.

• Does it simulate real-time market reaction? Yes. Participants see changes in investor sentiment, share price, and stakeholder commentary.

• Are share buybacks included? Yes. Participants may choose to distribute capital via buybacks instead of dividends.

• How long does the simulation last? It can be delivered as a 2 - 3 hour session or spread over several modules for deeper analysis.

• Is it based on real companies? Scenarios are fictional but modeled closely on real industry situations and financial dynamics.

• Is the simulation team-based? It can be. Teams may act as finance teams advising the CFO or presenting to the board.

• Can we change sectors? Yes. The simulation can be tailored to sectors like energy, consumer goods, or tech.

• Is communication assessed? Yes. Participants are evaluated on clarity, strategy alignment, and stakeholder handling in presentations or memos.

• Strategic alignment of dividend decisions

• Financial accuracy and sustainability

• Adaptability to changing business contexts

• Communication to internal and external stakeholders

• Balancing short-term pressure with long-term goals

• Team collaboration and stakeholder negotiation

Deliverables may include policy memos, board presentations, or post-simulation debriefs.