Financial Management: Principles and Applications, 13/e

16.3 Cash Distribution Policies in Practice

Dividend policies followed in corporate practice are as varied as the companies that use them. However, there are some basic attributes of those policies that can help a firm calibrate its policy with the practices of other firms.

Stable Dividend Payout Policy

The responses to a recent survey of corporate CFOs provide us with some insight into how business executives think about dividend policy. The results reported in Panel A of Figure 16.3 indicate the percentages of survey respondents that agreed or strongly agreed with a number of statements about dividend policy. The top five policy statements reported in Panel A suggest that executives are very concerned about maintaining a consistent cash payout ...