PPT-Chapter 17 Dividends, Dividend Policy,

and Stock Splits Learning Objectives Understand the formal process for paying dividends and differentiate between the most common types Explain individual preferences and issues surrounding different dividend policies. Dividends and Share repurchases: Analysis. Presenter’s name. Presenter’s title. dd. Month . yyyy. 1. Introduction. A. payout policy . is a set of principles regarding a corporation’s distributions to shareholders.. Financial. Theory. Lecture 6. Review. Goal: M. aximize Value of the Firm. Past Topics. Investment Decision . (spending money). Financing Decision . (raising money). Future Topics. Dividend Policy. After Studying Chapter 18, you should be able to:. Understand the dividend retention versus distribution dilemma faced by the firm. . Explain the Modigliani and Miller (M&M) argument that dividends are irrelevant. . Distributions to Shareholders: Dividends and Repurchases. 2. Topics in Chapter. Theories of investor preferences. Signaling effects. Residual model. Stock repurchases. Stock dividends and stock splits. Historical View. Illustrated by the arguments of Gordon (1959) - more dividends = more value. Follows from the discounted dividend approach to valuing a firm:. Historical View. Gordon argued that retained earnings rather than current dividends made the cash flow stream for the shareholder riskier.. Personal . Taxes. The cash flows to investors are typically taxed twice. Once at the corporate level and then investors are taxed again when they receive their interest or . dividend . payment. . For individuals:. Corporate Taxation: Nonliquidating Distributions. Learning Objectives. Explain how distributions from a corporation are taxed to a shareholder. Compute earnings and profits to determine shareholder dividend income and stock basis. Chapter 17. Chapter Outline. 17.1 Cash Distributions to Shareholders . 17.2 Dividends Versus Share Repurchase in a Perfect Capital Market. 17.3 The Tax Disadvantage of Dividends. 17.4 Payout Versus Retention of Cash. P.V. . Viswanath. Learning Objectives. 2. How is cash returned? The Mechanics. How do we choose between dividends and Share Repurchases?. Why Dividends and Share Repurchases are irrelevant in Perfect Markets. 22. 21. .1. . Explain what a cash dividend payment is, how dividend payments are made, and why dividend payments are different from interest payments.. 21. .2. . Describe typical dividend payouts and explain the importance of dividends.. Chapter 17. Dividend: cash paid out of earnings. Distribution: cash payment from sources other than earnings. Cash . Dividends & Dividend payment. Dividend forms:. Regular cash dividend – cash payments made directly to stockholders, usually each quarter. AN EXPERIENTIAL EXERCISE IN . DETERMINING A FIRM’S PAYOUT POLICY. Professor Robert M. Hull (Corresponding Author). rob.hull@washburn.edu (R. Hull). Professor William Roach. Brenneman Professor Robert A. Weigand. 16th . Edition. Kieso . ●. . Weygandt . ●. . Warfield. . Describe . the corporate form and the issuance of shares of stock. . Describe the accounting and reporting for reacquisition of shares.. Sem. 6. For . HrC. By- . Neha. . Arya. What Dividend/Payout policy means. In addition to the regular budgeting and financing decisions, firms also face the decision of making dividend payments to its shareholders from time-to-time..