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Chapter18ShareholderDistributions

Chapter18ShareholderDistributions - OEM 2009 Program...

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OEM 2009 Program Distribution to Shareholders Page 1 CHAPTER 18 Distributions to Shareholders Dividend Policy Dividend policy attempts to answer two questions: 1. What proportions of earnings to 1. What proportions of earnings to pay out, on average, in the form of dividends. 2. How to adjust dividend payments to reflect changes in the firm’s earnings stream. 4/15 5/13 5/15 6/1 Dividend Payment Procedure 4/15 5/13 5/15 6/1 Declaration Date Ex-Dividend Date Holder Of Record Date Payment Date Types of Dividends Regular dividend Extra dividend Special dividend Li id ti di id d Liquidating dividend May also define stock types : Speculative stocks Growth stocks Income stocks Cash (Invested) Fixed Assets Project NPV 2,000 8,000 2,000 M&M – Dividend Irrelevance Total Market Value Debt Equity Total Market Value 12,000 0 12,000 12,000 Old MV Firm Old MV Stock Pay $2 Dividend 12,000 12,000/1,000 2 000 Old MV Stock 12 M&M – Dividend Irrelevance New MV Stock 2,000 10,000/1,000 New MV Stock 10 Total Wealth 10 + 2 12 New MV Firm 10,000
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OEM 2009 Program Distribution to Shareholders
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