Corporate Finance

When a company decides to pay dividends, it has to be careful on how much it will be given to the shareholders. It is of no use to pay shareholders dividends

Dividend per share ratio is the sum of all dividends a company pays out over a fiscal year divided by the number of outstanding shares. It is used to share the profit of the company with shareholders. If this share decreases, it needs reinvestment in the operation, debt reduction and poor earnings of the company. In this case, there was an increase in the year of 2015 in J.B Hunt. It is used to share a company's profits with its shareholders. The reason for decreasing the value in dividend per share refers to reinvestment in the operation of a company, poor earnings, and debt reduction.

In order to understand the dividend policies of a company the dividend payout ratio and the dividend yield ratio are identified. Investors focus on the stock price and the dividends to decide whether to cash in on a stock. At the same time, the performance of a stock when compared to the overall industry performance is necessary when buying and purchasing stocks. Investors receive dividends regularly, based on the declared dividends that are mostly affected by the earnings.

HVN appropriate share price is $4.23 which is $0.12 higher than the actual closing price of $4.11. It is recommended for the investor to purchase more of the company’s share as it was undervalued. The sensitivity analysis shows the theoretical share price is very sensitive to change in WACC. Careful and continuous observation might be needed to constantly monitor the factors that can alter the WACC such as market return, the company’s beta, risk free rate, and tax rate. D/E ratio can also alter the WACC due to tax benefit on debt. This implies we should keep checking changes of the company’s capital structure, namely its financing decisions and activities because they are important factors to create value of the company.

In their thorough study of financial constraint correlation with investment-cash flow sensitivity, Kaplan and Zingales (QJE,1997) were able to show the more realistic findings. A more narrow scope of samples used in their research which only include group of firms which have the least dividend payout ratio and more possibility to show the relationship. The counterexample and conflict of findings between different literatures is not uncommon, this is due to different assumptions raised by the researcher as explained in the journal. For instance, the study on cash holdings and financial constraint by Kashyap,

Dividend Payout ratio is the percentage of earnings paid to shareholders in dividends. It is calculated by Dividends/Net Income.

So, the higher the dividend yields, the better income the shareholders get. When companies pay high dividends to shareholders, it can indicate a variety of things about the company, as the company may be currently undervalued or that it is trying to attract investors. Conversely, if companies pay little or no dividends, it may indicate that the company is overvalued or that the company is trying to develop the capital. The dividend yield of Maxis Berhad’s is only 3.2%, while Axiata Group Berhad has higher dividend yield compared to Maxis Berhad, which is 3.7%. A higher dividend yield may be desirable from an investor’s perspective. But, a higher dividend yield also means that the stock is under

Let us try to understand the concept of dividend. When a company earns the profit, it either invests that profit in back in the company for growth or pays back the profits to its shareholders in the form of dividends, so that they get some return from the investments

One of the company's financial policy is the payment of dividends to investors who have invested their funds in the form of company stock. Dividend itself is a profit corporation that is set aside, revealed and given to shareholders based on the decision of the board of directors or the sum of the proportion of company profits which are given to shareholders as remuneration for the contribution of shareholders who invest their money in companies. The aim of the company to pay dividends is debatable. Until now there has been no explanation that can be widely accepted, especially to answer such questions as why the corporation distributes some of its earnings in the form of dividends or why the corporation does not pay the dividends, why investors

Dividends are the returns that ordinary shareholders obtain from the firms in which they made their investments in form of equity. They are paid periodically and may vary from year to year depending on cash requirements of the firm as well as the profitability level of the firm. Dividend policy shows the rationale through which firms use to allocate the profits of a firm in payment of dividends to the shareholders of the firm. Dividend may be paid in cash or through bonus stock. It is the desire to get this periodic payment those investors chooses to invest their funds in common stock of these firms.

Firms often view dividends as a commitment to their stockholders and quite hesitant to reduce an existing dividends. Once established, dividend cuts would adversely affect the firm’s stock price as a negative signal

Firms are normally open to choose the level they want to pay a dividend to shareholders common stock, although factors such as legal requirements, debt agreements and availability of cash resources require some limitations on this result. Therefore, it is not uprising that the observed literature has recorded systematic variation in dividend behavior throughout the company, country, time and type of dividends. Variations among the registered firm, for example, Fama and French (2001) .They bring evidence to recommend that U.S. firms pay dividends tend to be huge and profitable, while non-payers are typically miniature, less profitable but high chance investment. Variation nationwide include La Porta, Lopez - de - silanes, Shleifer

Answers to Concept Questions 1. In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm’s management. This separation of ownership from control in the corporate form of organization is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the shareholders. If such events occur, they may contradict the goal of maximizing the share price of the equity of the firm. Such organizations frequently pursue social or

Dividend policy is at the theory core of corporate finance. It is one of the most debated topics in the finance literature and still keeps its prominent place. Many researchers have devised theories and provided empirical evidence regarding the determinants of a firm’s dividend policy. The dividend policy issue, however, is yet unresolved. Clear guidelines for an “optimal payout policy” have not yet emerged despite the voluminous literature. Yet we still do not have an acceptable explanation for the observed dividend behavior of companies. We are yet to understand completely the factors that drive dividend decision and the manner in which these factors interact. This is known as the dividend puzzle in the finance literature. Several hypotheses have been put forward to shed some light on this puzzle but in vain.

Dividend policy is the regulations and guidelines that a company uses to decide to make dividend payments to shareholders. Dividends are payments made to stockholders from a firm's earnings, whether those earnings were generated in the current period or in previous periods. When a company makes a profit, they must decide on what to do with those profits. They could continue to retain the profits within the company, or they could pay out the profits to the owners of the firm in the form of dividends. Once the company decides on whether to pay dividends, they may establish a dividend structure, which may in turn impact