Before this date the stock trades with dividend

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Unformatted text preview: e of payment at which they are distributed to shareholders. The announcement date is referred to as the declaration date. To make sure that the dividends are received by the right people the firm establishes an ex-dividend date that determines which shareholders are entitled to the dividend payment. Before this date the stock trades with dividend, whereas after the date it trades without. As dividends are valuable to investors, the stock price will decline around the ex-dividend date. 8.11.2 Stock repurchases in practise Repurchasing stock is an alternative to paying out dividends. In a stock repurchase the firm pays cash to repurchase shares from its shareholders with the purpose of either keeping them in the treasury or reducing the number of outstanding shares. Download free ebooks at bookboon.com 69 Corporate Finance Corporate financing and valuation Over the last two decades stock repurchase programmes have increased sharply: Today the total value exceeds the value of dividend payments. Stock repurchases compliment dividend payments as most companies with a stock repurchase pro...
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