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  • Constructive Dividend Vs. Constructive Dividends

    1519 Words  | 7 Pages

    Generally, a constructive dividend is unique from an ordinary dividend in many different ways. A constructive dividend is a form of payment to the shareholders from a corporation which can cause in financial benefits to its shareholder. Section 316(a) defines a dividend as any distribution of property (money, securities, and any other property except stock) that a corporation makes to its shareholders out of its current and accumulated earnings and profits after February 28, 1913. In other hand

  • Dividends and Taxes

    1084 Words  | 5 Pages

    Problem 17-1 Dividends and Taxes [LO2] Dark Day, Inc., has declared a $5.60 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Dark Day sells for $94.10 per share, and the stock is about to go ex-dividend.    What do you think the ex-dividend price will be? (Round your answer to 2 decimal places. (e.g., 32.16))      Ex-dividend price $   Problem 17-2 Stock Dividends [LO3]

  • Stock Dividend

    1037 Words  | 5 Pages

    Stock dividend * Definition: * A corporate distribution to shareholders declared out of profits, at the discretion of the directors of the corporation, which is paid in the form of shares of stock, as opposed to money, and increases the number of shares. * A dividend paid as additional shares of stock rather than as cash. If dividends paid are in the form of cash, those dividends are taxable. When a company issues a stock dividend, rather than cash, there usually are not tax consequences

  • Dividend Policy

    2425 Words  | 10 Pages

    to pay higher dividends to avoid the cost of external financing. While firm value can be increased by financial leverage, too much leverage leads to a shrinking company value as bankruptcy costs start to outweigh tax shield benefits. The higher risk makes debt holders asking for higher returns to compensate them for the increase in bankruptcy risk. Since dividend payments reduce the amount of capital available to secure the debt, many debt contracts include restrictions on dividend payments. Bond

  • Dividend and Topic

    4099 Words  | 17 Pages

    Topic: DIVIDENDS 1. Payments made out of a firm 's earnings to its owners in the form of cash or stock are called: A) Dividends. B) Distributions. C) Share repurchases. D) Payments-in-kind. E) Stock splits. Answer: A Topic: REGULAR CASH DIVIDENDS 2. A cash payment made by a firm to its owners in the normal course of business is called a: A) Share repurchase. B) Liquidating dividend. C) Regular cash dividend. D) Special dividend. E) Extra cash dividend. Answer:

  • Disadvantages Of Dividend

    834 Words  | 4 Pages

    Dividend investing is investing in stocks for large cash dividends so that is a regular return on the investment in the form of cash. In fact receiving dividends is very much like collecting interest on money deposited in a bank account. In stock markets, predicting the rise and fall of share prices is very much difficult and in many ways dividend stocks offer a safe way of getting returns. In addition to that dividend stocks also have several other advantages over non-dividend stocks. Let us try

  • Dividend Decision

    2104 Words  | 9 Pages

    15.3  Dividend Relevance Model  15.3.1  15.3.2  Walter Model  Gordon’s Dividend Capitalization Model  Dividend Decision  15.4  Dividend Irrelevance Theory:  Miller and Modigliani Model  15.5  Stability of Dividends  15.6  Forms of Dividends  15.7  Stock Split  15.8  Summary  Terminal Questions  Answers to SAQs and TQs  15.1 Introduction  Dividends are that portion of a firm’s net earnings paid to the shareholders. Preference shareholders  are  entitled  to a fixed  rate of  dividend  irrespective 

  • The Importance Of Dividend Policy

    819 Words  | 4 Pages

    Dividend decision is considered as an integral part of investment decision making to maximize shareholders wealth as suggested by a number of scholars such as Bainbridge (1993), Jensen (2001); Brigham and Ehrhardt (2002); Brealey and Meyer (2003). Considering its importance to the organisation and shareholders, these scholars argued that shareholders return is maximized when company pays out dividend and investors are likely to make some capital gains when the share prices appreciate. Some existing

  • Dividend Policy

    4962 Words  | 20 Pages

    help management must decide on the form of the dividend distribution, generally as cash dividends or via a share buyback. Various factors may be taken into consideration: where shareholders must pay tax on dividends, firms may elect to retain earnings or to perform a stock buyback, in both cases increasing the value of shares outstanding. Alternatively, some companies will pay "dividends" from stock rather than in cash. The purpose of an optimal dividend policy should be to maximize shareholders’

  • The Dividend Irrelevance Theory

    1507 Words  | 7 Pages

    Theoretical Framework Ozo, Arun, Kostov, & Uzonwanne (2015) stated that looking through the dividend theories made by the previous researchers, it can be classified into two dimensions: the dividend irrelevance theory and the dividend relevance theory. Such theories include the bird-in-the-hand theory, agency costs theory, signalling theory, catering theory and clientele-effect theory. The continuing studies of Professor Merton Miller and Franco Modigliani in 1958, 1961, and 1963 (MM) have played