《财务管理专业英语》教学课件10.ppt

10.1 Dividends and Dividend Policy 10.2 The Dividend Puzzle 10.3 Factors Influencing the Dividend Decision 10.4 Dividend Policies 10.5 Stock Repurchases DIVIDENDS AND DIVIDEND POLICY Dividend Payout Procedure 1. Declaration date 2. Ex-dividend date 3. Record date 4. Payment date DIVIDENDS AND DIVIDEND POLICY Types of Dividends Cash Dividends Stock Dividends Property Dividends THE DIVIDEND PUZZLE Dividend Irrelevance Theory what a firm pays in dividends is irrelevant and that stockholders are indifferent about receiving dividends. THE DIVIDEND PUZZLE Dividend Relevance Theory The Tax-preference Explanation——investors expect higher pretax returns from dividend-paying stock because of the future tax liability on dividends. The Signaling Explanation——dividend policy conveys important information to the market about the quality of a company. The Agency Explanation——dividend mechanism provides an incentive for managers to reduce these agency costs related to the principal/agent relationship. That is, agency theory models contend that dividend policy mitigates agency conflicts between managerial and stockholder priorities. FACTORS INFLUENCING THE DIVIDEND DECISION 1. Shareholder factors 2. Firm factors 3. Other constraints FACTORS INFLUENCING THE DIVIDEND DECISION Shareholder factors Income Needs Risk Preferences Tax Status Dilution of Ownership FACTORS INFLUENCING THE DIVIDEND DECISION Firm Factors Stage of Life Cycle External Financing Costs Access to Funds and Reserves Profitability and Earning Stability DIVIDEND POLICIES Residual Dividend Policy Stable Dollar Dividend policy Constant Dividend Payout Ratio Low Regular plus Specially Designated Dividends STOCK REPURCHASES Ways of Repurchases Tender Offer Open Market STOCK REPURCHASES Reasons for Stock Buybacks 1. If a company is sitting on a large sum of cash and must decide how to invest it, one of the options is to distribute part of it to shareholders