Discuss the Proposition that a Company's Dividend Policy is Irrelevant Essay

Discuss the Proposition that a Company's Dividend Policy is Irrelevant to its Market Value - Essay Example Some argue that dividend policy will not affect the wealth of the shareholders, whereas some have the opinion that the decisions about dividend policy will affect the shareholder’s wealth and the firm’s valuation. â€Å"Dividend policy refers to the decision regarding the magnitude of the dividend payout, the percentage of earnings paid to the stockholders in the form of dividends. The central, and as yet unresolved, issue concerning dividend policy is whether changes affect firm value† (Dividend Policy 2012). Following are the factors which influence the dividend policy: †¢ Market deficiency for example taxes, agency costs, asymmetric information, flotation costs and transaction costs. †¢ Behavioral considerations for instance illogical shareholder behavior, behavioral desires of shareholders and usual behaviors of firms. †¢ Industry characteristics for example profitability, size, investment opportunities, availability of cash on probable cash fl ows and future earnings. †¢ Managerial likings for example smoothing of dividends and the disinclination to decrease future dividends. Arguments for the Dividend Irrelevance: Dividend Irrelevance is a theory that an organization’s strategy of dividend has no actual influence on the value of the company. â€Å"The main cause for paying or not paying dividends is the cost of tax. Though dividend irrelevance is not absolutely accurate, it is a superior adequate estimate to the certainty that basic assessment should usually do not take into account strategy of dividend† (Expert 2012). The enduring assumption of dividends involves with the aim that if the organization cannot spend its income to make a revisit that is more than expenditure, it must deliver the income by paying dividends to shareholders. â€Å"The theory of dividend irrelevance is founded on the basis that an organizations dividend strategy is sovereign of the value of its share value, in addition to th e dividend choice is an inactive residual. The price of the organization is resolved by its financing and investment decisions in a best capital formation, and not by its decision of dividend. A general policy of dividend should provide every industry its value of shares, as the policy of dividend is irrelevant in resolving the value of the firm† (Barman n.d., p. 17). This method suggests that dividends symbolize earnings residual more willingly than a dynamic decision variable that influences the organization’s worth. Such a vision is reliable with the theory of dividend irrelevance put forward by the authors Merton H. Miller and Franco Modigliani. â€Å"The authors argue that the industries value is ascertained only by the earning risk and authority of its resources, and that the way in which it divides its earnings stream among dividends and internally maintained funds, does not influence this cost. The big variations in dividends increased the value of share. When there is an increase in the dividend, the share prices also get increase and when the dividend decreases, the share price gets reduced† (Gitman 2008, p. 513). An organization fascinates investors whose liking for the stability as well as payment of dividends match with an organization’s solidity of dividends and actual payment pattern. The shareholders wish for constant dividends on the basis of

Gothic old novel Essay Example | Topics and Well Written Essays - 750 words

Gothic old novel - Essay Example â€Å"Why is this path so old? It seems to have not been used in a long time, â€Å"I wondered. The way was getting smaller as I move. Some cold liquid fell on my half covered back. I said a short prayer to God to save my life. The rain had finally started, and here I was in the middle of nowhere alone. â€Å"I have to move fast,† I thought. I had some noise before I could make a move. I felt cold and stood rooted to the ground with my eyes tightly closed. When silence returned, I got hold myself and run quickly to no destination. Finally, I came to an open compound that looked well kept and organized; the rain was now pouring heavily, lightning and thunder accompanied it. I thanked my God and felt relieved.† Hallo anyone home?† there was no answer. I moved to the door and turned the lock, it opened. It was dark inside; I took out my phone that had a torch. It was wet, what was I to do next? I slowly found my way to a seat in one of the corners of the room. I didn’t know when I fell asleep only to wake up to the sound of pots falling to the ground. There was light coming from a room just at the end of a passage it was too bright to be electricity. I moved there ensuring that I made no noise. There was no one in sight, everything well arranged, it was a kit chen. The cooker was on, and a huge pot of water was boiling. The door got shut at my back, I jump in fear, and the room had pots of fresh blood and heaps of stocked meat that was already going bad and smelly. I felt someone moving across the room yet I could not catch the sight of anyone. I ran to the door and found that it was locked, and the room was becoming brighter as time went, I could not think straight fear got the better part of me. There was noise coming from an inner room that had a dazzling light, it seems people were in there and argued about something. I had to save myself. Pans were flying out of the room and what scared me most were the different sizes of knives