财务管理英文Chapter18.pptVIP

Chapter 18 Dividend Policy Chapter Objectives Discuss the different forms of dividends and the appropriate dividend payment terminology. Outline the arguments supporting the case for dividend irrelevance. Discuss factors favoring a low or a high payout. Explain the residual dividend policy. Illustrate the situation of share repurchases vs paying a cash dividend. Discuss both share splits and reverse Stock Splits. Dividend Payments Procedure for Dividend Payment Declaration date: the board of directors declares a payment of dividends. Ex-dividend date: a share does ex-dividend on the date the seller is entitled to keep the dividend. Under ASX rules, shares are traded ex-dividend on and after the seventh business day before the record date. Record date: declared dividends are distributable to shareholders of record on a specific date. Payment date: the dividend cheques are mailed to shareholders of record. Procedure for Dividend Payment Price Behavior around the Ex-Dividend Date In a perfect world, the stock price will fall by the amount of the dividend on the ex-dividend date. Arguments For Dividend Policy Can the payment of cash dividends affect shareholder wealth? Does Dividend Policy Matter? Does Dividend Policy Matter? MM: Irrelevance of Dividend Policy Under perfect markets and in the absence of arbitrage opportunities, the value of a firm is independent of the dividend policy Assumptions: Perfect competition, no taxes, no transaction costs Homogenous expectations The investment policy of the firm does not depend on its dividend policy (‘always invest if NPV0’) Investors can create whatever income stream they prefer by using homemade dividends. Residual Dividend Policy Issue costs eliminate any indifference between financing by internal capital and new shares. Dividends are paid only if profits are not completely used for investment purposes. Desired debt-to-equity ratio is maintained. Dividends Increase Value Market Imperfections and Clientele Effec