经济类课件汇集_FIN2101_Lecture11 Dividend Policy

F|N2101 Business financeⅢ

FIN2101 Business Finance II

Module 10 Dividend Policy

Module 10 Dividend Policy

Student Activiries Reading Text, Chapter 12 Text Study Guide, Chapter 12 Study Book, Module 10 Appendix 10.1, 10.2 and 10.3 Tutorial Activities Tutorial Workbook, Self Assessment Activity 10.1 Text Study Guide, Chapter 11, All

Student Activities Reading ▪ Text, Chapter 12 ▪ Text Study Guide, Chapter 12 ▪ Study Book, Module 10 ▪ Appendix 10.1, 10.2 and 10.3 Tutorial Activities ▪ Tutorial Workbook, Self Assessment Activity 10.1 ▪ Text Study Guide, Chapter 11, All

Cash dividends Typically semi-annual in Australia Interim dividend paid after the end of the first half of the year, and a final dividend usually paid after the AGM Can only be paid out of current or accumulated profIts. Cannot be paid out of capital or if it Would make the company insolvent

Cash Dividends ▪ Typically semi-annual in Australia. ▪ Interim dividend paid after the end of the first half of the year, and a final dividend usually paid after the AGM. ▪ Can only be paid out of current or accumulated profits. ▪ Cannot be paid out of capital or if it would make the company insolvent

Payment Procedures Announcement date Declaration date Date of record EX-dividend date Payment date

Payment Procedures ▪ Announcement date ▪ Declaration date ▪ Date of record ▪ Ex-dividend date ▪ Payment date

Payment Procedures 2 3 5 EX-dividend period 1 Announcement date 2 Declaration date 3 EX-dividend date 4 Date of record 5 Payment date

Payment Procedures 1 2 3 4 1 Announcement date 2 Declaration date 3 Ex-dividend date 4 Date of record 5 Payment date 5 Ex-dividend period

Three Approaches Dividend policy cannot affect shareholders wealth in a perfect capital market and is therefore irrelevant High dividends are best- relevant Low dividends are best- relevant

Three Approaches ▪ Dividend policy cannot affect shareholders’ wealth in a perfect capital market and is therefore irrelevant. ▪ High dividends are best - relevant. ▪ Low dividends are best - relevant

Relevance Argument Resolution of uncertainty-the 'bird-in- the-hand' argument/fallacy Information content of dividend announcements- signalling

Relevance Argument ▪ Resolution of uncertainty - the ‘bird-in￾the-hand’ argument/fallacy. ▪ Information content of dividend announcements – signalling

Relevance Argument Clientele effect tax investors' preferences

Relevance Argument ▪ Clientele effect –tax –investors’ preferences

Relevance Argument Agency costs can be reduced by paying higher dividends Issue costs will be minimised if the firm pays lower dividends Shareholders transaction costs will be higher, the lower the dividend

Relevance Argument ▪ Agency costs can be reduced by paying higher dividends. ▪ Issue costs will be minimised if the firm pays lower dividends. ▪ Shareholders’ transaction costs will be higher, the lower the dividend