Chapter 17 Payout Policy. - ppt download: Chapter Outline 1. Cash Distributions to Shareholders 2. Dividends Versus Share Repurchase in a Perfect Capital Market 3. The Tax Disadvantage of Dividends 4. Payout Versus Retention of Cash 5. Signaling with Payout Policy 6. Stock Dividends, Splits, and Spin-offs 7.
Advice for the Financial Manager Identify the different ways in which corporations can make distributions to shareholders Understand why the way in which they distribute cash flow does not affect value absent market imperfections Demonstrate how taxes can create an advantage for share repurchases versus dividends Explain how increased payouts can reduce agency problems but potentially reduce financial flexibility Understand the role of payout policy in signaling information to the market Describe alternate non-cash methods for payouts 2
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