Therefore, 'on balance, much empirical evidence supports the view of dividends as a signaling device'. There have been reported instances when the management has deliberately reduced the expected worth of the dividend, considered to be a strategic decision aimed at the improvement of the financial flexibility and growth prospects on long-term scale. However the managers of the company have practiced such options, where they have 'used dividend actions to convey useful information, keeping in view the fact that dividend changes may not be perfect signals'. It has been agreed the by economic and strategic advisory of the company that 'dividend increases may be ambiguous signals unless the market can distinguish between growing firms and disinvesting firms, i.e., those with a lack of investment opportunities', therefore the Linear Technology has ensure that there is no compromise over the reputation of the company.

Several interesting patterns have been identified which are widely practiced by the Linear Technology. Earlier it was observed that 'dividends tend to lag behind earnings i.e. increases in earnings are followed by increases in dividends, and decreases in earnings sometimes by dividend cuts'. It has been also observed that the dividends are 'sticky because firms are typically reluctant to change dividends; in particular, firms avoid cutting dividends even when earnings drop'. The trend predicts that 'dividends tend to follow a much smoother path than do earnings'.

The Tax-Preference Explanation

The tax effect has further deeply influenced the dividend related policy of the company. The policy of the company in this regard is in lieu with the proposals drafted in the theory of the tax-preference as per which, 'the investors may favor retention of funds over the payment of dividends because of tax-related reasons', the favorable treatment of capital gains over dividends is another factor well-monitored by the Linear Technology, which assist the investors in preference of the low dividend payout to a high payout. The company believes that the dividend payment shall be kept low to ensure that maximum prices. However, the tax effect has varied impact on various types of investors, there is a strong possibility that some of the investors may be attracted towards the Linear Technology only if it had offered 'dividend policies appropriate to their particular tax circumstances', the practice has been regarded as 'the tax clientele effect', whereas there is also a possibility that the 'stocks with low payouts should attract investors in high tax brackets, leaving high payout stocks to investors subject to low or zero tax rates'.

The Agency Explanation

The concept of agency theory is considered to be void with reference to the dividend payment policy of the Linear Technology. The theory is based upon 'the conflict of interests between corporate managers and outside shareholders'. Considering an example where 'management can consume excessive perquisites out of undistributed corporate earnings and invest the retained funds sub-optimally, such an conflict can result to agency costs' which is adopted and practiced rarely in the case of the Linear Technology. The company has never devised dividend mechanism that offers 'an incentive for managers to reduce the costs related to the principal/agent relationship, in this regard, there is a possibility to increase the dividends i.e. 'paying larger dividends reduces the internal cash flow subject to management discretion and forces the firm to seek more external financing'. Another common practice of 'raising costly outside capital subjects the firm to the scrutiny of the capital market for new funds and reduces the possibility of suboptimal investment' has been ignored by the Linear Technology due to the fact that the 'monitoring by outside suppliers of capital also helps to ensure that managers act in the best interest of outside shareholders' is not essential owing to the limited numbers of the shares.

Consideration of General Trend

Consequently, the change in the policy was expected to develop more accommodative stance which reduced the risks associated with the residual supply, the risk was deterred by imposing limitation on the ' unexpected noncompetitive rollover decisions could affect the final price'. It is speculated that the within the share market the final price of the share is less predictable and difficult to determine because public is unfamiliar about the rollover plans, and 'the randomness in these plans, from the perspective of the dealer' makes it difficult for the public to make serious efforts, these are the serious considerations marked by the company.

The supplies are dependent upon the standard deviation of the monthly per capita...

It has been observed that number of secondary dealers have secured new issues from the primary agents, and 'presumably pay for them upon delivery, though the stock trade actively prior to their issue in a when-issued market'. The tenders which are signified as noncompetitive are offered for the purchase of the shares at the final price; the prices are paid on the suction days irrespective of its valuation. The predictive power of the stock market is expected to improve by introduction of market variables into the standard models which are based on evaluation and inspection of the financial reports of the respective companies. According to the report, 'the accounting information has no predictive influence over the supervisory rating downgrades; there was unexpectedly the subordinated debt spreads perform only insignificantly better'.
Consideration of National Economy

It is common observation that the economy always undergoes the recession, and has always overcome that period, therefore the interest rates is expected to follow the same pattern, in general practice the yield curve is said to reflect archetypal response on the basis of its dropping and twisting, which is responsible for the reduction in the level of production, and therefore give reason for the fear and reluctance of the investors to get further strong, however a bounce back is expected which is expected to increase the short-term rates in comparison with the long-term rates, thereby strengthening the concept of free and open market, therefore either ways 'the interest rates would rise as the economy expands'. The Linear Technology is prepared for the decline in the long-term interest rates, which is support to influence the performance of the economy, as it is responsible for the higher productivity level, which accounts for the better investment opportunities which accounts for heightened demand for investment funds which accounts for the rise in the short-term interest rates, and also create a positive impact on the interest rates of long-term. According to reports, 'such dynamics have direct consequences for the level of the funds rate that would be consistent with monetary neutrality'. The Linear Technology understands that due to the rising influence and activation of the real forces towards the economic reforms and revolution, the funds rates are expected to increase. The government in this regard can play the lead role of halting such economic set backs which account for the reduction of the funds rate, and the government should maintain the funds rate at a stable position, which is possible through 'more rapid expansion in the money supply'. According to the reports by the Central Bank, the market investors are of the opinion that higher funds rate are expected to rise in near future, however the rise of the funds rate will be accompanies by the tightening monetary policy by the government to sustain the growth. The free market has although increased the level of economic activities, but has put the banks offering long-term maturity bonds in difficult position to capture and regain the lost capital.

The ability and authority of the Linear Technology towards providing liquidity, without creating any major impact on the inflation in terms of rise, is the parameter for evaluating the effectiveness of the monetary policy. In 2001, it was observed that the monetary policy was successful enough to 'deliver the expectation of stable inflation, and hence one in which the behavior of market interest rates more generally were wholly determined by developments in the real economy'. In some of the cases, the fluctuating federal funds rate are the reaction that are compulsory towards ensuring that the policy either remains inflationary or disinflation-ary. It has been observed that weak economic status is expected to cause depreciation in the market interest rates. In some of the related cases, the coincident features of the economy, which are based on 'the reversals in the stock market, poor corporate earnings, rising unemployment, elevated perceptions of risk', such situations and conditions are expected to encourage the savers and lenders to move towards such assets which have greater concentration of liquidity, and are based on shorter duration for maturity. Such situations are expected to 'inevitably drove down short-term security yields relative to those on longer term assets', due to the reason that expectations with reference to the stability of the inflation figures are prominent. These forces are responsible for the generation of an environment in which short rates, including the federal funds rate, decline at massive scale, and have 'relatively little effect on rates at the longer end of the maturity spectrum'. It…