ch16 - Corporate Finance Chapter 16 Dividends I. Different...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Corporate Finance Chapter 16 Dividends I. Different types of dividends a. Cash distribution of earnings b. Reduces retained earnings c. Stock dividend: increases the number of shares outstanding, reducing the value of each share d. Stock split: increases the number of shares outstanding. Much larger than a stock dividend II. Standard method of cash dividend payment a. Declaration date: the date the board passes a resolution to pay a dividend b. Date of record: can still purchase stock and still receive dividend c. Ex-dividend date: stocks trade less the dividend amount. Cannot receive dividend if buy on or after this day d. Payment date e. The stock price will fall by the amount of the dividend III. Irrelevance theory a. Homemade dividends i. Sell shares ex-dividend IV.Dividends and investment policy a. Firms should never forgo positive NPV projects to increase a dividend V. Stock repurchases a. Firm rids excess cash by buying up their own stock b. After a repurchase, stock price doesn’t drop, shareholder
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

ch16 - Corporate Finance Chapter 16 Dividends I. Different...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online