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Log In Sign /persuasive-essay-topics-school-related.html. A Review of Theories and Empirical Evidence. No general consensus has yet emerged after several decades of investigation, and scholars can often disagree even about the same empirical evidence. This paper aims at providing dividend policy literature reader with a comprehensive understanding of dividends and dividend policy by reviewing the main theories and explanations of dividend policy including dividend irrelevance hypothesis of Miller and Review, bird-in-the-hand, tax-preference, clientele review, signalling, and agency costs hypotheses.

The paper also attempts to present the main empirical studies on corporate dividend policy. However, due to the enduring nature review extensive range of the debate about dividend policy which has spawned a vast amount of literature that grows by the day, a full review of review debates is not feasible. The paper reaches at a conclusion that the famous statement of Fisher Black link dividend policy "the harder we look at the dividends picture, the more it review like a puzzle, with pieces that just do not fit together" Black, performance applications computing high dividend policy literature phd, p.

Introduction In corporate finance, the finance manager is generally thought to face two operational decisions: The capital budgeting decision is concerned with dividend policy literature real assets review firm should acquire while the financing decision is concerned dividend policy literature review how these assets should be financed.

A third decision may arise, however, when the firm begins to generate profits. Should the firm distribute all or proportion of earned profits in the form of dividends to review shareholders, review should it be ploughed back into the business?

This issue of dividend policy literature review policy is one that has engaged managers since the birth of the modern commercial corporation. Surprisingly then dividend dividend policy literature review remains one of the most contested issues in finance.

The study of dividend policy has captured the attention review visit web page scholars since the middle of /essay-writing-service-in-canada.html last century. They have attempted to review several link pertaining to dividends and formulate theories and source to explain corporate dividend behaviour.

The dividend enigma has not read article been an enduring issue in finance, it also remains unresolved. Review, Bernardo and Welchp. The enduring nature and dividend policy literature review range of the debate about dividend policy has spawned a vast amount of literature that grows by dividend policy literature review day.

For this reason, a full review of all debates is not feasible1. Dividend policy literature, this paper endeavours to give justice to the importance of both the topic of dividend policy as an area of financial economic research, and also to the literature that has been produced addressing that topic, by reviewing the most important and influential studies in this area.

It attempts to outline the main theories and explanations of dividend policies and to review the main empirical studies on corporate dividend policy.

The remaining of this paper is organized as follows. Section 2 gives a short background of corporate dividend policy. Section 3 analyses the theories of dividend policy starting with more info dividend irrelevance hypothesis of Miller and Modigliani, and then the alternative hypotheses including dividend policy literature review the-hand, tax-preference, clientele effects, signalling, and agency review hypotheses.

Dividend policy literature review 4 summarises the paper.

Dividend Policy: A Review of Theories and Empirical Evidence | Thi Huynh Giai -

Background of Corporate Dividend Policy2 The issue of corporate dividends has a long history and, as Frankfurter and Wood observed, is bound up with the development of the corporate form itself. Corporate dividends date back review least to the early sixteenth century in Holland and Great Britain when the captains of sixteenth century sailing ships review selling financial claims to investors, which entitled them to share in the proceeds, if any, of the voyages3.

By the end of the sixteenth century, these financial claims began to be traded on open markets in Amsterdam and were gradually replaced by shares of ownership. It is worth dividend policy literature review that even then many investors would buy shares from more than one review to diversify the risk associated with this type of business.

At the end of each voyage, the enterprise liquidation of the venture ensured a distribution of the profits to owners and helped dividend policy literature review reduce the possibilities of fraudulent review by captains Baskin, However, dividend policy literature review the profitability of these ventures was established and became more regular, the process of liquidation of the assets at the conclusion of each voyage became increasingly inconvenient and costly.

The successes of the ventures increased their credibility and dividend policy literature became more 1 Lease et al. Under dividend policy literature review commenda, the commendator provided the capital dividend policy literature review the commendatarius managed the investment Walker,p.

As a result, these companies began trading as going concern entities, and distributing only the profits rather than the entire invested capital. Gradually, corporate charters began to restrict the payments of dividends review the profits only. The ownership structure of shipping firms gradually evolved into a joint stock company form of business.

But it was dividend policy literature trading firms more generally click here adopted the joint stock review. Inthe British East India Company issued its first source stock shares with a nominal value. In the seventeenth century, the success of this type of trading company seemed poised to allow the spread of review form of business organization to include other activities such as mining, banking, clothing, and utilities.

The Literature review Act of effectively slowed, but did not stop, the development of review corporate form in Britain for almost a century Walker, In the early literature review of corporate history, managers realized the importance of high and stable dividend payments. In some ways, this was due to the analogy investors made with the /write-your-essay-for-you-grandmother.html form of financial security then traded, dividend policy government bonds.

Bonds paid a regular and stable interest payment, and corporate managers found that investors preferred shares that performed like bonds i. For example, Bank of North America in paid dividends after only dividend policy literature review months of operation, and the bank review entitled the board of directors to distribute dividends regularly out of profits.

The scarcity and continue reading of financial data often resulted in investors making their assessments of corporations through their dividend literature review rather than reported earnings. Consequently, an increase in divided social services essay tended to be reflected in rising stock prices. To summarise, literature review development of dividend payments to shareholders has been tied admissions consulting agreement college with the development of dividend policy corporate form itself.

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