CHAPTER 13

Dividend Theory and Policy

LEARNING OBJECTIVES

  • Highlight the issues of dividend policy
  • Critically evaluate the relevance of dividend policy
  • Discuss the bird-in-the-hand argument for paying current dividends
  • Explain the logic of dividend irrelevance
  • Explain the objectives of dividend policy in practice
  • Describe the factors that influence a firm’s dividend policy
  • Justify the importance of the stability of dividend
  • Discuss the significance and implications of bonus shares, stock split and share buyback
INTORDUCTION

Dividend decision of firm is yet another crucial area of financial management. The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained ...

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