FINA 2710 Chapter Notes - Chapter 18: Tender Offer, Treasury Stock, Net Present Value
26 Mar 2017
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Regular cash dividend cash payments made directly to stockholders, usually each quarter. Extra cash dividend indication that the extra amount may not be repeated in the future. Liquidating dividend some or all of the business has been sold. Declaration date board declares the dividend and it becomes a liability of the firm. Date of record holders of record are determined and they will receive the dividend payment. Date of payment cheques are mailed. Price behaviour around ex-dividend date: stock price will fall by the amount of the dividend on the ex-date. Dividends matter the value of the stock is based on the pv of expected future dividends. Mms dividend-irrelevance proposition under ideal conditions, the value of the firm is unaffected by dividend policy. Dividend policy is irrelevant when there are no taxes or other market imperfections. The shareholder who receives a dividend that is greater than desired can reinvest the excess.
