WEB APPENDIX 15A An Example: The Residual Dividend Model In the chapter we discussed the problem with strict adherence to the dividend residual model. In practice‚ companies use the residual dividend model to develop an understanding of the determinants of an optimal dividend policy‚ but they typically use a computerized financial forecasting model when setting the target payout ratio. Most larger corporations forecast financial statements over some horizon (usually 5 to 10 years). Projected
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Dividend Policy Vinod Kothari Corporations earn profits – they do not distribute all of it. Part of profit is ploughed back or held back as retained earnings. Part of the profit gets distributed to the shareholders. The part that is distributed is the dividend. The ratio of the actual distribution or dividend‚ and the total distributable profits‚ is called dividend payout ratio. How much of its profits should a corporation distribute? There are several considerations that apply in answering this
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EXCHANGE OFFER6EVALUATION OF THE TRADE-OFF7REFERENCES10INTRODUCTIONA firm’s decisions about dividends are often mixed up with other financing and investment decisions. Some firms pay low dividends because management is optimistic about the firm’s future and wishes to retain earnings for expansion. Other firms might finance capital expenditures largely by borrowing. All the above are examples of dividend policies which can be defined more precisely as the trade-off between retaining earnings on the one
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Dividend Policy of Indian Corporate Firms: An Analysis of Trends and Determinants Dr. Y. Subba Reddy1 The present study examines the dividend behavior of Indian corporate firms over the period 1990 – 2001 and attempts to explain the observed behavior with the help of trade-off theory‚ and signaling hypothesis. Analysis of dividend trends for a large sample of stocks traded on the NSE and BSE indicate that the percentage of companies paying dividends has declined from 60.5 percent in 1990 to 32.1
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Question 1: There are a number of theories regarding the relevance of dividend policy-discuss these theories. In what situations might management decide to increase dividends? Dividend Irrelevance Theory Much like their work on the capital-structure irrelevance proposition‚ Modigliani and Miller also theorized that‚ with no taxes or bankruptcy costs‚ dividend policy is also irrelevant. This is known as the dividend-irrelevance theory‚ indicating that there is no effect from dividends on a company’s
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THE SETTING OF DIVIDEND POLICY Dividend policy is likely to be set in the form of a goal rather than a rigid rule‚ even though a definite policy has the advantage of providing the investor‚ or potential investor‚ a clear basis for choice. Investors knowing the dividend policy of the alternative companies can choose the type of company that best fits their individual investment goals. This is desirable‚ because stockholders differ in the extent to which they prefer dividends rather than opportunities
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DIVIDEND POLICY AT FPL GROUP‚ INC. (Case report) Subject: Dividend Policy at FPL Group‚ Inc. Problem: Should Kate Stark revise her current investment recommendation of “hold” on FPL’s stock to her clients? Options: 1) To change her “hold” recommendation to a “buy” recommendation 2) To change her “hold” recommendation to a “sell” recommendation 3) Remain unchanged; continue with the “hold” recommendation Recommendation: Table of Contents Overview 3 Analysis 4 Overview In 1994
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RIM’s dividend policy is no dividend. The company has not paid any dividend since they completed its initial public offering during fiscal 1998. Motorola has never paid dividend. Apple has not paid dividend since 1996. Nokia and HTC paid dividend regularly maybe because they are not North American company. Basically high technology companies in their growth stage typically have not paid a dividend because the thinking is that they can re-invest their earnings to boost the growth of the company
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DIVIDEND POLICY AND SHAREHOLDERS WEALTH MAXIMIZATION: A STUDY OF SELECTED QUOTED FIRMS ON THE NIGERIA STOCK EXCHANGE (NSE) BY ABDULLAHI BASHIR MUHAMMED DEPARTMENT OF BANKING AND FINANCE FACULTY OF MANAGEMENT SCIENCE UNIVERSITY OF Abuja PHONE NO: 08065727548‚ E-MAIL: Bash7th@yahoo.com ISMAILA DADDY ABUBAKAR DEPARTMENT OFECONOMICS UNIVERSITY OFABUJA PHONE NO: 08030596520 E-MAIL: abu4rim@yahoo.com AHMED TIJANI ABDULMAJEED DEPARTMENT OF ECONOMICS UNIVERSITY
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corporation. All rights reserved. 1 Shareholder Wealth Effects of Dividend Policy Changes in an Emerging Stock Market: The Case of Cyprus* Nickolaos Travlos ALBA‚ Greece‚ and Cardiff Business School‚ U.K. Lenos Trigeorgis University of Cyprus‚ Cyprus‚ and University of Chicago‚ U.S.A. Nikos Vafeas University of Cyprus‚ Cyprus This article examines the stock market reaction to announcements of cash dividend increases and bonus issues (stock dividends) in the emerging stock market of
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