tailieunhanh - Lecture Essentials of corporate finance (2/e) – Chapter 14: Dividends and dividend policy

In this chapter, you will: Understand dividend types and how they are paid, understand the issues surrounding dividend policy decisions, understand the difference between cash and share dividends, understand why share repurchases are an alternative to dividends. | Dividends and dividend policy Chapter 14 Key concepts and skills Understand: dividend types and how they are paid the issues surrounding dividend policy decisions the difference between cash and share dividends why share repurchases are an alternative to dividends 14- Copyright © 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Chapter outline Cash dividends and dividend payment Does dividend policy matter? Establishing a dividend policy Share repurchase: An alternative to cash dividends Bonus issues and share splits 14- Copyright © 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Cash dividends Regular cash dividend—cash payments made directly to shareholders, usually each quarter Extra cash dividend—indication that the ‘extra’ amount may not be repeated in the future Special cash dividend—similar to extra dividend, but definitely won’t be repeated Liquidating dividend—some or all of the business has been sold 14- Copyright © 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Dividend—Payment made out of a firm's earnings to its owners, in the form of either cash or shares. Distribution—Payment made by a firm to its owners from sources other than current or accumulated retained earnings. Cash dividends reduce cash and retained earnings (except for liquidating dividends which may reduce paid-in capital). Dividend payment chronology Declaration date—Board declares the dividend and it becomes a liability of the firm Ex-dividend date Occurs four business days before date of record If you buy a share on or after this date, you will not receive the dividend Share price generally drops by about the amount of the dividend Date of record—holders of record are | Dividends and dividend policy Chapter 14 Key concepts and skills Understand: dividend types and how they are paid the issues surrounding dividend policy decisions the difference between cash and share dividends why share repurchases are an alternative to dividends 14- Copyright © 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Chapter outline Cash dividends and dividend payment Does dividend policy matter? Establishing a dividend policy Share repurchase: An alternative to cash dividends Bonus issues and share splits 14- Copyright © 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Cash dividends Regular cash dividend—cash payments made directly to shareholders, usually each quarter Extra cash dividend—indication that the ‘extra’ amount may not be repeated in the future .