Dividend Policy

Dividend Policy - DIVIDEND POLICY Stony Brook College of...

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1 DIVIDEND DIVIDEND POLICY POLICY Stony Brook College of Business BUS 330 V. Giardini
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2 THE DIVIDEND DECISION THE DIVIDEND DECISION Dividends Are Discretionary Earnings can be paid out as dividends or Retained for reinvestment in the business. Both Options Benefit Stockholders Dividend Payout: Immediate Cash - Current Income … “Income Stocks” Retained Earnings - Growth - Deferred Benefit “Growth Companies” The Dividend Decision Is A Trade-off. .. THE DIVIDEND CONTROVERSY THE DIVIDEND CONTROVERSY Does Paying Dividends or Paying Larger Rather Than Smaller Dividends, Have a Positive, Negative, or Neutral Effect on Stock Price??
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3 Three Theories: I. I. DIVIDEND IRRELEVANCE DIVIDEND IRRELEVANCE Tailoring the Cash Flow Stream Sell off Shares to Maintain Current Income Works in Perfectly Efficient Capital Markets Problems: Transaction Costs, Income Taxes II. II. DIVIDEND PREFERENCE DIVIDEND PREFERENCE Argument Is Based On The Uncertainty Of The Future. Bird in the Hand Theory Logical flaw: Why Invest In the Firm In The First Place?
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4 III. III. DIVIDEND AVERSION DIVIDEND AVERSION Based On Taxes: Capital Gains vs Ordinary Income OTHER CONCEPTS OTHER CONCEPTS The Clientele Effect
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Dividend Policy - DIVIDEND POLICY Stony Brook College of...

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