BUSF_A01.qxd

Chapter 11 • Gearing, the cost of capital and shareholders’ wealth There are sets of multiple-choice questionsand missing-word q ...

Appendix I: Proof of the MM cost of capital proposition (pre-tax) Appendix II: Proof of the MM cost of capital proposition (afte ...

Chapter 1 • Introduction Thus by investing α(VU−BG) the investor can get the same income as had been obtained from an investment ...

Appendix II: Proof of the MM cost of capital proposition (after tax) Investment required Income produced Buy proportion aof the ...

12.1 Introduction Dividends are payments made by businesses to their shareholders. They seem to be viewed by both the directors ...

Modigliani and Miller on dividends Clearly it would be to the shareholder’s advantage for the business to make the investment an ...

Chapter 12 • The dividend decision that would apply if no dividend were paid. In other words, the dividend would make no differe ...

The traditional view on dividends What they did notsay is that it does not matter whether dividends are paid or not as far as th ...

Chapter 12 • The dividend decision Going back to White plc in Example 12.1, if the shares are priced at £6 before a £1 per share ...

12.5 Other factors raising an equal amount by share issue on the other hand, as equivalent. This will not be true in practice. I ...

Chapter 12 • The dividend decision shareholders. This would not suggest great confidence in the future on the part of the direct ...

Other factors is interpreted adversely by the capital market, the best interests of shareholders’ wealth might be advanced by ma ...

Chapter 12 • The dividend decision to sell need not do so. Share repurchasesallow the business to make significant cash distribu ...

Dividends: the evidence l a tendency for the younger, smaller businesses (mentioned by Benito and Young and by Fama and French ( ...

Chapter 12 • The dividend decision provide information about the level of profitability in the years following the change. Incre ...

Dividends: the evidence attract institutional investors, many of which are tax exempt (life insurance funds, pension funds and t ...

Chapter 12 • The dividend decision Many businesses seem keen to increase their dividends in a steady, sustainable way. In its 20 ...

Conclusions on dividends Agency Agency problems (and costs) tend to arise where shareholders and directors have different object ...

Chapter 12 • The dividend decision another, more preferred, one. In either case, the effect of changes in dividend policy seems ...

Problems lDebt finance – relatively cheap. lTends to favour low dividends where business needs funds for investment. lAgency pro ...