BUSI 530 Chapter 17: Chapter 17
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Payment of cash by the firm to its shareholders. Ex-dividend: without the dividend, buyer of a stock after the ex-dividend date does not receive the most recently declared dividend. If used, firms are not allowed to pay a dividend. Stock dividends and splits: distributions of additional shares to a firm"s stockholders, does not change total shareholder wealth. Firm distributes cash to stockholders by repurchasing shares: ways to be used (4, open market repurchase. Firm announces that it plans to buy stock in the secondary market, just like any other investor: tender offer. Firm offers to buy back a stated number of shares at a fixed price: auction. Firm states a range of prices at which it is prepared to repurchase: direct negotiation. Firm may negotiate repurchase of a block of shares from a major shareholder. Shares are repurchased at a generous price that makes the bidder happy to leave the target alone.