CHECK THESE SAMPLES OF Dividend Policy decisions and Capital Structure decisions in relation to Signaling THeory
The stock market is affected by the decisions made by managers in relation to changing the capital structure and payout policies of their organization.... The signalling theory thus provides equilibrium in relation to access to transactional information, allowing the parties involved to transact effectively.... Therefore, it is imperative to first identify the aspects affecting the capital structure and payout policies of the organization before signalling the respective parties or making any major decisions (Notes on Signalling 2005)....
7 Pages
(1750 words)
Essay
On many occasions the process of price discovery in market is frustrated by earnings management or insider trading in relation to declaration of dividends.... For a meaningful analysis of dividend policy the dividend history of the companies in relation to earnings (EPS) and dividend yield over years, leverage or debt to equity ratio and the management policy in distribution of earnings needs to be studied.... dividend policy Introduction There are multifarious factors which determine the dividend policy of a company....
8 Pages
(2000 words)
Essay
In this model MM concluded that capital structure does not have any effect on the value of the firm.... However, MM II, argued that by introducing corporate taxes in to the first model, it gives rise to tax shields which in turn leads to optimal capital structure (Black, 2006).... Carry out your own research to find a non-financial firm that changed its dividend policy over the last few years.... Introduction dividend policy is the strategy that a particular company uses to determine the amount of funds that should be retained for reinvestment in new projects and the amount of dividend that should be paid out to the shareholders....
14 Pages
(3500 words)
Essay
hellip; Leland and Pyle (1977) also present the relevance of the signaling theory on capital structure from the viewpoint of the owners.... Yet, there continue to co-exist between financial theorists two opposing views on the relevance of capital structure.
The first view, by Ross (1977) and Myers and Majluf (1984) argues that managers may use financial policy decisions, in the form of changes in the capital structure, to convey information to the market....
22 Pages
(5500 words)
Essay
The review considers the issues of capital structure optimization, enhancement of the shareholder's wealth and payout policy.... ) The two classical and the most common types of payout means are the dividend payment decisions and stock repurchases.... Their paper is considered to constitute the base for the development of the modern finance theory: Miller and Modigliani (M&M) show that payout policy is irrelevant in competitive markets with no transactions costs, and when investors are fully rational and symmetrically informed....
6 Pages
(1500 words)
Literature review
The paper starts to defend the proposition that dividend policy is irrelevant as described by Miller and will be followed by evidence of such claim.... rdquo; In said paper, Miller explained his position about the few aspects of corporate financial policy where academics and practitioners differ on what really is the effect of dividend policy on stock price.... The first of this journal was of course directed to the issue of dividend by explaining that as a matter of economic theory....
14 Pages
(3500 words)
Essay
The dividend policy usually guides this process.... dividend policy is the set of guidelines or principles that companies adapt to decide the amount of the profits that shareholders are to receive (Miller and Modigliani, 1961).... Even though, most economists believe that it is the value and stability of payment of dividends that the investors should rely on while making decisions; research ascertains that this is irrelevant and should warrant sidelining....
7 Pages
(1750 words)
Coursework
Though there are many theories relating to capital structure, however, only a few have gained acceptance (Frank & Goyal, n.... dividend policy too forms a crucial part of management decisions as in the absence of market efficiency a change in the dividend may prove to be unfavorable for the share price.... he trade-off theory and Pecking order theory complement each other.... Trade-off theory gives importance to the benefits of the interest tax shield and the costs of bankruptcy....
12 Pages
(3000 words)
Term Paper