Determinates of Dividend Policy Apple

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Contents
Introduction 2
Theories and Determinants of Dividend Policy (Section 1) 2
Tax and Clienteles Theory 2
Free cash flow and the Agency Theory 3
Growth and The Lifecycle theory 4
Firm size 5
Information Asymmetry and Signaling theory 5
Risk and the Bird in hand theory 7
Profitability 8
Conclusion 9
Analysis of Apple and Dell Dividend Policy (Section 2) 9
Apple Inc. 9
Dell Inc. 11
Conclusion 13
Reference 14

Introduction
In a private firm, after a period of business activity the owner of the business evaluate her profit and decide how much to withdraw from the business and how much to reinvest back into the business. Publicly traded business also makes similar decisions on whether to return cash back to the owners (shareholders) and how much in the form of dividend.
Lintner (1956) was the first empirical study on dividend policy, he revealed that dividend add value to the shares of a firm. The turning point in theoretical modeling of dividend was the brilliant paper of Modigliani and Miller (1961) of dividend Irrelevance. Since the postulation of dividend irrelevance, financial economists have argued via two major schools of thought; those who believe dividend is relevant and those that believe dividend is not relevant. Despite the theories by academics to examine dividend policy, the dividend picture is still puzzling.
The objective of this paper is to (1) critically review some of the factors that influences dividend policy of firms from a theoretical perspective (2) Analyze the last five-year dividend policy of Apple Inc. and Dell Inc. and discuss the factors that has influenced dividend policy in these firms over the period considered.
Theories and Determinants of Dividend Policy (Section 1)
Tax and Clienteles Theory
Clientele theory attributes diversity in dividend policy according to the preference of investor. Clientele effects as a factor that affect dividend policy seek to explain how investors are attracted to a particular corporation as a result

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