ORIE 3150 October 14 2010 Notes Div Treas Stock ans

ORIE 3150 October 14 2010 Notes Div Treas Stock ans - ORIE...

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ORIE 3150 Dividends and Treasury Stock There are three dates associated with a cash dividend. 1. Date of declaration. 2. The date of record. 3. The date of payment. Stock sold after the date of record is sold ex-dividend. Note that the settling date is now 3 days on the major USA stock exchanges. That is, when you buy stock in a corporation on a major exchange, you do not become a stockholder of record until three business days later! This used to be five days, now it is three. Arguably, with computers and communication systems the way they are today, it could be one day or less, but it is three days. You only get a dividend payment if you are a shareholder of record. Treasury stock is stock, either common or preferred, that has been issued and reacquired by the corporation, usually by buying the stock on the open market. Why is this done? 1. To get stock for employee stock plans. 2. Because the stock is undervalued. 3. Because the firm has excess cash that is cannot use wisely. Treasury stock is the last item (a deduction) in the stockholder’s equity section of the balance sheet.
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  • '10
  • Dividend, 1926, 1917

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