During classroom discussions, you came across multiple views about whether or not corporate dividend policy is relevant for a firm’s value. Drawing from your understanding and knowledge about the issue of dividend policy relevance, provide your informed view about whether the corporate dividend policy is worth spending time and resources on in as far as its effect on a firm’s value is concerned. There is no word limit but remain within a reasonable length. Do not over or under write.
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During classroom discussions, you came across multiple views about whether or not corporate dividend policy is relevant for a firm’s value. Drawing from your understanding and knowledge about the issue of dividend policy relevance, provide your informed view about whether the corporate dividend policy is worth spending time and resources on in as far as its effect on a firm’s value is concerned.
There is no word limit but remain within a reasonable length. Do not over or under write.
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- One of the most commonly accepted objective of a firm is to maximize the value of the firm and the wealth of its shareholders and the major financial decisions that could have an impact on the wealth of shareholders is dividend payout decisions. The issue of dividend policy is therefore a very important one in the current business environment. Dividend policy is the regulations and guidelines that a company uses to decide dividend payment to its shareholders. Dividend policy decisions of company are the primary element of corporate policies which have been an issue of interest in the corporate world over the past decade. You have just been appointed as the Finance Director of a large manufacturing company which is listed at the Ghana stock exchange. Your immediate task is to develop a dividend policy for the company Required; As the new finance director of the company write a memorandum to the Managing director of the company discussing the factors you will take into consideration…Which one of the following statements is TRUE? a. Creditors have a claim on a firm's earning stream through the dividend payments they receive. b. One tool of corporate governance is a company's tax avoidance strategy. c. One tool of corporate governance is stock repurchases. d. One tool of corporate governance is how the company's charter affects the likelihood of a takeover. e. One tool of corporate governance is choosing a good investment banker.It has become common for companies to offer their shareholders a choice between a cash dividend and an equivalent scrip dividend. Critically discuss the advantages of scrip dividends from the point of view of the company and the shareholders, ensuring the response draws upon relevant academic research within this highly topical area of financial management.
- Cash dividends speak louder than words when it comes to conveying information about management’s expectations of the future of the business.’ Discuss what does the above sentence mean about dividend policy issues.Which of the following statements is CORRECT? Select one: a. Conflict of interest between shareholders and managers is not possible. b. By definition, the agency problem can only take place in corporations but not in proprietorships and partnerships. c. Conflict of interest between shareholders and bondholders is not possible. d. Managers always work to maximize the long-run value, and therefore the price, of their company stocks. This is exactly what shareholders desire.Tutorial Questions Explain to John, your mentor, the primary goal of the organization? Your manager is requesting you to provide an explanation to the question. Would the role of a financial manager be likely to increase or decrease in importance if the rate of inflation increased? What is the difference between stock price maximization and profit maximization? What are the three principal forms of business organization? What are the advantages and disadvantages of each? What mechanisms exist to influence managers to act in shareholders’ best interests? What is an agency relationship? What agency relationships exist within a corporation? What are financial intermediaries, and what economic functions do they perform? How does an efficient capital market help to reduce the prices of goods and services? What is the term structure of interest rates? What is a yield curve? How should users and savers of…
- You just been employed as the new Chief Executive Officer of a medium-sized company that listed on the Ghana Stock ExchangeAt the Board Meeting the chairman advised you and your management team to avoid what he termed Agency problem"Explain the term "Agency Problem" in corporate governance, and briefly explain four () wys by which the shareholders of company encourage its managers act in wwys which are consistent with the objective of value maximizationWhich of the following is true? 1. Shareholder activism requires the investors to exercise their voting rights. 2. Agency problem arises if the management does not hold the majority share in the firm (i.e., more than 50%). 3. Stock options and performance plans are examples of external market forces. 4. Agency costs are borne by all the stakeholders, including the shareholders.We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example, the manager might: Make shareholders as wealthy as possible by investing in real assets. Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Choose high- or low-risk assets to match shareholders' risk preferences. Help balance shareholders' checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?
- Firms must provide the right incentives if they are to get -Select-shareholderscreditorsmanagersItem 1 to focus on long-run value maximization. Conflicts exist between managers and stockholders and between stockholders (represented by managers) and -Select-employeesdebtholderscustomersItem 2 . Managers' personal goals may compete with shareholder wealth maximization. However, managers can be motivated to act in their stockholders' best interests through (1) reasonable -Select-vacationcompensationperquisiteItem 3 packages, (2) firing of underperforming managers, and (3) the threat of hostile takeovers. If a firm's stock is undervalued, corporate raiders will see it as a bargain and will attempt to capture the firm in a hostile takeover.-Select-StockholdersBondholdersItem 4 generally receive fixed payments regardless of how well the firm does, while -Select-stockholdersbondholdersItem 5 earn higher returns when the firm's earnings are higher. Investments in -Select-riskysafeItem…Discuss the effects of increasing the leverage of a firm to pay generous dividends to stockholders or to pay and high expenses, advisory and management fees to buyout firms as Toys R Us did.Give three reasons why accountants need to be ethical in their duties in regards to preparation of financial statements. Explain the importance of these ethics to the companycompliance issues for emerging growth companies. Respond to this question: Is SOX so cumbersome that it limits economic growth of new businesses?