財務管理基礎 第13版 教學課件Chap018_PPT.ppt

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'財務管理基礎 第13版 教學課件Chap018_PPT.ppt'
Dividend Policy and Retained Earnings18Chapter OutlineDecisions on use of firm’s annual earningsDividends and the dividend policyFactors influencing the dividend policyStock dividends and stock splitsRepurchase of the firm’s shares2The Marginal Principle of Retained EarningsBenefits to stockholders analyzed by comparing:Rate of return on retained earningsEarnings that may be generated by offering dividendsProject financed by internally generated funds must provide a higher rate of return:Compared to what stockholders can achieve on other investments3Life Cycle Growth and Dividends4Dividends as a Passive VariableDividends are paid out only if the corporation cannot make better use of the funds for the benefit of stockholdersActive decision variable is the retained earningsResidual (after fulfilling internal corporate expenses) is paid to stockholdersCash dividends5An Incomplete TheoryResidual theory of earnings does not consider the stockholders’ opinion on dividendsIt is considered acceptable, if the stockholders’ only concern is achieving highest returns :Corporate retained earnings remaining in the businessPaid out as current dividendsIf however, the stockholder prefers one over the other option, then this theory is incomplete6Arguments for the Relevance of DividendsDividends resolve uncertainty in the minds of investorsIt can be hypothesized that stockholders might:Apply a higher discount rate (Ke), and Assign a lower valuation of funds that are retained in the businessBecause of the information content of dividends –viewed more favorably than retained earnings to the stockholdersStockholder’s needs and preferences go beyond the marginal principle of retained funds7Arguments for the Relevance of Dividends (cont’d)In practice, it appears that most corporations adhere to the following logic:Investment opportunities relative to a required return (marginal analysis) are determinedThen, it is tempered by subjective notion of stockholders’ desiresFor mature firms:An analysis of both investment opportunities and stockholder preferences may indicate that a higher rate of payout is required8Corporate Dividend Policy9Dividend StabilityMaintenance of stability is a primary factor in considering stockholder desire in dividend policyDollar amount of cash dividends tends to be more stableIncreases in value takes place when new permanent levels of income are achievedManagement hopes to lower the discount rate (Ke), applied to future dividends, thus raising the value of the firm10Corporate Profits and Dividends for Non-Financial Firms 11Legal RulesMost states forbid payment of dividends that might impair the initial capital contributions to the firmThey may thus be distributed only from past and current earningsAim is to protect creditorsIf the firm chooses to pay dividends equal to the retained earnings, the operation of the firm may be jeopardized12Raiding the CapitalAssume a company has the following statement of net worth, th。省略部分。re)Without stock dividend = 10 X (20 X $6.60) = 10 X $132 = $1,320With stock dividend = 11 X (20 X $6.00) = 11 X $120 = $1,320 The total market value is unchanged25Possible Value of Stock DividendsIf at the time a stock dividend is declared, the cash dividend per share remains constant, the stockholder will receive greater total cash dividends.26Use of Stock DividendsMost frequently used by growth companies as a form of ‘informational content.’Explains the retentions of funds for reinvestment purposesMarket reaction may be neutral or slightly positiveMay also be used to:Camouflage inability of firm to pay dividendsCover up ineffectiveness in generating a cash flowInformed investors may react negatively27Stock SplitsSimilar to a stock dividend - only more numbers of shares are distributedThe NYSE and the FASB encourage distribution in excess of 20-25% to be handled as stock splitsThe accounting for a stock split involves:No transfer of funds from retained earnings to the capital accountsReduction in par valueProportionate increase in the number of outstanding shares28Stock Splits (cont’d)The market price of the stock drops proportionately to the splitThe benefit is almost impossible to capture after the split has been announcedPrimary purpose of a stock split is to: Lower the price into a more popular trading rangeSo companies with a substantial growth in market price can participate29XYZ Corporation Before and After Stock Split30Reverse Stock SplitsA firm exchanges fewer shares for existing shares with the intent of increasing the stock priceStock price does not always increase by a commensurate amountMay represent evidence that the firm is in troubleMain purpose - to attempt to place a stock’s value at a level acceptable to:The NYSEThe American Stock ExchangeThe NASDAQ31Repurchase of Stock as an Alternative to Dividends A firm with excess cash may choose to repurchase corporate stockStock repurchase can be thought as an alternative to cash dividend payoutsTheoretically, the benefits to the stockholder are equal under either alternativeThe overall benefit to stockholders is that earnings per share may increase as the number of outstanding shares is decreased32Financial Data of Morgan Corporation33Other Reasons for RepurchaseAcquired if the selling price is lowThereby maintaining a constant demand for its own securitiesUsed for employee stock options or as part of a tender offer in a mergerAs a protected device against being taken over as a merger candidate34Recent Examples of Share Repurchase Announcements 35Dividend Reinvestment PlansProvides the investor with an opportunity to buy additional shares of stock with the cash dividend paid by the companyThe company is the beneficiary of increased cash flowCompany’s transfer agent, buys shares of stock in the market for the stockholderShareholders benefited by:Low transaction costsRight to own fractional sharesFlexibility between cash and common stock36
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教學 13 chap018 chap 基礎 018 ppt 財務管理
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