Fundamentals of Corporate Finance‚ 2e (Berk) Chapter 17 Payout Policy 17.1 Cash Distribution to Shareholders 2) The way a firm chooses between alternate uses of free cash flow is referred to as A) retention ratio. B) payout policy. C) call policy. D) debt policy. Answer: B 3) The date on which the board of directors of a company authorizes the dividend is called the ________ date. A) declaration B) record C) ex-dividend D) distribution Answer: A 4) The firm will pay the
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CHAPTER 17: PAYOUT POLICY Chapter 17 Learning Objectives 1. Describe how dividends are paid out and how corporations decide how much to pay. 2. Explain how stock repurchases are used to distribute cash to investors. 3. Explain why dividend increases and repurchases are good news for investors and why dividend cuts are bad news. 4. Explain why payout policy would not affect shareholder value in perfect and efficient financial markets. 5. Show how market imperfections‚ especially the different
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recommend? 2. What happens to Gainesboro’s financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a 40% payout is pursued? d. a residual payout policy is pursued? Note that case Exhibit 8 presents an estimate of the amount of borrowing needed. Assume that maximum debt capacity is‚ as a matter of policy‚ 40% of the book value of equity. In addition‚ please check TN_26 provided in blackboard which will help you verify this question.
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Journal of Banking & Finance 27 (2003) 1297–1321 www.elsevier.com/locate/econbase Corporate governance‚ dividend payout policy‚ and the interrelation between dividends‚ R&D‚ and capital investment Klaus Gugler * Department of Economics‚ University of Vienna‚ WP No. 9803‚ Br€nnerstrasse 72‚ 1210 Vienna‚ Austria u Received 12 October 2000; accepted 5 November 2001 Abstract This paper investigates the relationship between dividends and the ownership and control structure of the firm
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Corporate Payout Policy Harry DeAngelo Marshall School of Business University of Southern California hdeangelo@marshall.usc.edu Linda DeAngelo Marshall School of Business University of Southern California ldeangelo@marshall.usc.edu Douglas J. Skinner University of Chicago Booth School of Business dskinner@chicagobooth.edu May 2009 Abstract We present a synthesis of academic research on corporate payout policy grounded in the pioneering contributions of Lintner (1956) and Miller
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be carried out from two different perspectives mentioned above. And a conclusion will be generated. The Limited Necessity of Dividend Payout Admittedly‚ a high dividend yield makes a lot of investment sense to investors due to the certainty of a company’s financial performance it supplies. Investors are always seeking secured current income and dividend payout can be quite attractive in that way. A dividend payout’s up and downs can delicately affect a company’s stock price (Allen‚ 2002). Historically
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Proposition 21‚ also known as “the Gang Violence and Juvenile Crime Prevention Act of 1998‚” was passed in 2000 in the state of California with the objective of toughening the penalties on felonies committed by youths‚ specifically gang-related felonies. While the intention of this proposition is certainly a good one since it aimed to fight and reduce youth and gang-related crimes‚ the repercussions and harms that it brought to the youth population and the society as a whole‚ in my opinion‚ outweigh
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to fund an increased dividend payout or a stock buyback‚ a firm might invest less‚ borrow more‚ or issue more stock. Which of those three elements is Gainesboro’s management willing to vary‚ and which elements remain fixed as a matter of the company’s policy? 2. What happens to Gainesboro’s financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a 40% payout is pursued? d. a residual payout policy is pursued? Note that case
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CHAPTER 1 INTRODUCTION Dividend policy is the decision for the firm to pay out earnings verses retaining and reinvesting them. Dividend decision has remained one of the tough challenges for financial economists. We are yet to understand completely the factors that influence dividend decision and the manner in which these factors interact. From the practitioner’s viewpoint dividend policy of a firm has an implication for investors‚ managers‚ lenders and other stakeholders. For investors‚ dividends
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Financial Management Case Study-Payout: Gainesboro I. The goals of Gainesboro i. Corporate Goals Management expected the firm to grow at an average annual compound rate of 15% and reach $2.0 billion in sales and $160 million in net income through 2011. ii. Recent strategy of Gainesboro The company devoted a greater share of its research-and-development budget to CAD/CAM as to reestablish its leadership in the field. The company also underwent two massive restructurings‚ including selling
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