Chapter 158 Distributions to Shareholders: Dividends and Repurchases ANSWERS TO END-OF-CHAPTER QUESTIONS 158-1 a. The optimal distribution policy is one that strikes a balance between dividend yield and capital gains so that the firm’s stock price is maximized. b. The dividend irrelevance theory holds that dividend policy has no effect on either the price of a firm’s stock or its cost of capital. The principal proponents of this view are Merton Miller and Franco Modigliani (MM). They
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Memo to Shareholders – Carpino Company To: Shareholders‚ Carpino Company Inc. From: Subject: First Year Performance of Carpino Company Introduction Upon completion of Carpino Company’s first year of business‚ it is with great satisfaction that I present to you the year end Cash Flow Statement and analysis for the period ended January 31‚ 2007. You will notice the statement as presented shows in detail the various operating‚ investing‚ and financing activities of the organization. Analysis
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The power of shareholders. ‘’Being shareholders has two sides‚ One side is being a financier of the company. The financer is mostly a investor looking for a place to drop his money and make money. On the other side the shareholder is the owner of the company’’ - Peter Blom‚ CEO Triodos Bank. This is a sustainable bank founded in the Netherlands and also located in the United Kingdom‚ Belgium‚ Germany‚ Spain and France. In this company I did my internship in the fall semester of 2013. It is a
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One of the most widely used concepts in finance is that shareholders require a risk premium over bond yields to bear the additional risks of equity investments. While models such as the two-parameter capital asset pricing model (CAPM) or arbitrage pricing theory offer explicit methods for varying risk premia across securities‚ the models are invariably linked to some underlying market (or factor-specific) risk premium. Unfortunately‚ the theortical models provide limited practical advice on establishing
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finance managers can‚ in practice‚ contribute to the maximisation of shareholder wealth”. This essay will examine how finance managers in day to day practice can participate in the aid of increasing maximum shareholder wealth. The focus point of this is based on the financial managers themselves‚ how they can manipulate and change things in order to increase shareholder wealth using certain tools and methods of analysis. Shareholders are deemed as the owners of the business. Their main aim is to
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2.6 Is Shareholder Value Maximization the Right Objective? In their widely cited book The Value Imperative—Managing for Superior Shareholder Returns‚ McTaggart‚ Kontes‚ and Mankins (1994) write‚ Maximizing shareholder value is not an abstract‚ shortsighted‚ impractical‚ or even‚ some might think‚ sinister objective. On the contrary‚ it is a concrete‚ future-oriented‚ pragmatic‚ and worthy objective‚ the pursuit of which motivates and enables managers to make substantially better strategic and organizational
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CSR Gap Analysis of the GAP Gap Inc prefaces their 2004/5 CSR report with the question: what is a company’s role in society? Their answer is that a company ‘only realizes its full potential when it embraces its role as a global citizen’. This raises two interesting points; the first is that the answer to the question ‘what is a company’s role in society?’ will be conditioned by normative assumptions about business/government relations in a firm’s country of incorporation. David Detomasi
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investigated under two different approaches on corporate value maximization: Shareholder Approach and Stakeholder Approach. So‚ firstly both approaches are defined briefly. Secondly‚ compare and contrast of shareholder and stakeholder approaches is made. Keywords: Purpose‚ Corporation‚ Value Maximization‚ Shareholder Approach‚ Stakeholder Approach. Shareholder Approach on Value Maximization: Shareholder approach on value maximization focuses the corporation’s purpose on maximizing
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ISSN 1045-6333 THE SHAREHOLDER WEALTH MAXIMIZATION NORM AND INDUSTRIAL ORGANIZATION Mark J. Roe Discussion Paper No. 339 11/2001 Harvard Law School Cambridge‚ MA 02138 The Center for Law‚ Economics‚ and Business is supported by a grant from the John M. Olin Foundation. This paper can be downloaded without charge from: The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center/ SHAREHOLDER WEALTH MAXIMIZATION JEL Class: D42‚ G32
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Chico and the Man is a comedy in the 70’s that shows how a grumpy old white man becomes friends with a Chicano. Ed Brown is the grumpy old man who owned and operated a filing station in Las Angeles. He hires a fast talking cherry young Chicano to help him run the station‚ he eventually lets him live in the station and they both learn about each other’s generation and culture and learn how to love each other. It shows situations on how a Mexican and white people can live and work together
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