台湾大学Dividend Policy Training.PPTVIP

Topics Covered How Dividends are Paid How Do Companies Decide on Dividend Payments Why Dividend Policy Should Not Matter Why Dividends May Increase Firm Value Why Dividends May Reduce Firm Value Dividend Payments Dividend Payments Dividend Payments Stock Dividend Stock Dividend Example - cont - After the stock dividend what is the new price per share and what is the new value of the firm? Answer The value of the firm was 2 mil x $15 per share, or $30 mil. After the dividend the value will remain the same. Price per share = $30 mil / 3 mil sh = $10 per sh. Stock Repurchase Stock Repurchase Stock Repurchase The Dividend Decision 1. Firms have longer term target dividend payout ratios. 2. Managers focus more on dividend changes than on absolute levels. 3. Dividends changes follow shifts in long-run, sustainable levels of earnings rather than short-run changes in earnings. 4. Managers are reluctant to make dividend changes that might have to be reversed. Dividend Policy is Irrelevant Example - Assume ABC Co. has no extra cash, but declares a $1,000 dividend. They also require $1,000 for current investment needs. Using MM Theory, and given the following balance sheet information, show how the value of the firm is not altered when new shares are issued to pay for the dividend. Record Date Pmt Date Post Pmt Cash 1,000 0 1,000 (40sh @ $25) Asset Value 5,000 5,000 5,000 Total Value 6,000 5,000 6,000 # of Shares 200 200 240 price/share $30 $25 $25 NEW SHARES ARE ISSUED Dividend Policy is Irrelevant Example - continued - Shareholder Value Record Pmt Post Stock 6,000 5,000 6,000 Cash 0 1,000 0 Total Value 6,000 6,000 6,000 Stock = 240sh @ $25 = 6,000 Assume stockholders purchase the new issue with the cash dividend proceeds. Dividends Increase Value Market Imperfections and Clientele Effect There are natural clients for high-payout stocks, but it does not follow that any particular firm can