MC9901C03 Lecture Notes - Lecture 1: Internal Financing, Dividend Policy, Retained Earnings
2 Mar 2022
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Document Summary
This article is all about a detailed study of the impact of dividend decisions on a firm"s valuation. Understanding the importance of internal financing, various types of dividend policy, and approaches to dividend policy like modigliani and. The term dividend refers to that part of a company that is distributed by a company among its shareholders. It is the reward of shareholders for the investment made by them in the shares of the company. Investors are interested in earning the maximum return on their investment and maximizing their wealth. On the other hand, a company needs to provide funds to finance its long-term growth. If a company pays out as dividend most of what it earns, then for business requirements and further expansion it will have to depend upon outside resources such as the issue of debt or new shares. The dividend policy of a firm thus affects both long-term financing and the wealth of shareholders.
