股利政策外文及翻译.docx

1、股利政策外文及翻译目 录Dividend policy 2股利政策 8Dividend policyProfitable companies regularly face three important questions: (1) How much of its free cash flow should it pass on to shareholders? (2) Should it provide this cash to shareholders by raising the dividend or by repurchasing stock? (3) Should it maint

2、ain a stable, consistent payment policy, or should it let the payments vary as conditions change?When deciding how much cash to distribute to shareholders, finance manager must keep in mind that the firms objective is to maximize shareholder value. Consequently, the target pay rate ratiodefine as th

3、e percentage of net income to be paid out as cash dividendsshould be based in large part on investors preference for dividends versus capital gains: do investors prefer (1) to have the firm distribute income as cash dividends or (2) to have it either repurchase stock or else plow the earnings back i

4、nto the business, both of which should result in capital gains? This preference can be considered in terms of the constant growth stock valuation model: If the company increases the payout ration, the raises.This increase in the numerator, taken alone, would cause the stock price to rise. However, i

5、fis raised, then less money will be available for reinvestment, that will cause the expected growth rate to decline, and that will tend to lower the stocks price. Thus, any change in payout policy will have two opposing effects. Therefore, the firms optimal dividend policy must strike a balance betw

6、een current dividends and future growth so to maximize the stock price. In this section, we examine three theories of investor preference: (1)the dividend irrelevance theory, (2)the bird-in-the-hand theory ,and(3) the tax preference theory. DIVIDEND IRRELEVANCE THEORY It has been argued that dividen

7、d policy has no effect on either the price of a firms stock or its cost of capital. If dividend policy has no significant effects, then it would be irrelevance .The principal proponents of dividend irrelevance theory are Merton Miller and Franco Modigliani(MM).They argued that the firms is determine

8、d only by its basic earning power and its business risk. In other words, MM argued that the value of firm depends only on the income produced by its assets, not on how this income is split between dividends and retained earnings. To understand MMs argument that dividend policy is irrelevance, recogn

9、ize that any shareholder can in theory construct his or her own dividend policy .If investors could buy and sell shares and thus create their own dividend policy without incurring costs, then the firms dividend policy would truly be irrelevant. Note, though, that investors who want additional divide

10、nds must incur brokerage cost to sell shares, and investors who do not want dividends must first pay taxes on the unwanted dividends and then incur brokerage cost to purchase shares with the after-tax dividends. Since taxes and brokerage costs certainly exist, dividend policy may well be relevant.In

11、 developing their dividend theory, MM made a number of assumptions especially the absence of taxes and brokerage costs. Obviously, tax and brokerage costs do exist, so the MM irrelevance theory may not be true. However, MM argued that all economic theories are based on simplifying assumptions, and t

12、hat the validity of a theory must be judged by empirical test, not by the realism of its assumptions.BIRD-IN-THE-HAND THEORYThe principal conclusions of MMs dividend irrelevance theory is that dividend policy does not affect the required rate of return on equity, Ks. This conclusion has been hotly d

13、ebated in the academic circles .In particular, Myron Gordon and John Lintner argued that Ks decreases as the dividend payout is increase because investor are less certain of receiving the capital gains which are supposed to result from retaining earnings than they are of receiving dividend payments

14、MM disagreed .They argued that Ks independent of dividend policy, which implies that investors are indifferent between D1/P0 and g and, hence, between dividends and capital gains. MM called the Gordon-Lintner argument the bird-in-the-hand fallacy because, in MMs view, most investors plan to reinvest

15、 their dividends in the stock of the same or similar firms, and, in any event, the riskiness of the firms cash flows to investors in the long run is determined by the riskiness of operating cash flows, not by dividend payout policy.TAX PREFERENCE THEORYThere are three tax-related reasons for thinkin

16、g that investors might prefer a low dividend payout to a high payout: (1) Recall from Chapter II that long-term capital gains are taxed at a rate of 20 percent, whereas dividend income is taxed at effective rates which go up to 39.6 percent. Therefore, wealthy investors might prefer to have companie

17、s retain and plow earnings back into the business. Earnings growth would presumably lead to stock prices increases, and thus low- taxed capital gains would be substituted for higher-taxed dividends. (2)Taxes are not paid on the gains until a stock is sold. Due to time value effects, a dollar of taxe

18、s paid in the future has a lower effective cost than a dollar paid today. (3) If a stock is held by someone until he or she dies, no capital gains tax is due at all-the beneficiaries who receive the stock can use the stocks value on the death day as their cost basis and thus completely escape the ca

19、pital gains tax.Because of these tax advantages, investors may prefer to have companies retain most of their earnings. IF so, investors would be willing to pay more for low-payout companies than for otherwise similar high- payout companies.There three theories offer contradictory advice to corporate

20、 managers, so which, if any, should we believe? The most logical way to proceed is to test the theories empirically. Many such tests have been conducted, but their results have been unclear. There are two reasons for this(1)For a valid statistical test, things other than dividend policy must be held

21、 constant; that is, the sample companies must differ only in their dividend policies, and(2)we must be able to measure with a high degree of accuracy each firms cost of equity. Neither of these two conditions holds: We cannot find a set of publicly owned firms that differ only in their dividend poli

22、cies, nor can we obtain precise estimates of the cost of equity.Therefore, no one can establish a clear relationship between dividend policy and the cost of equity. Investors in the aggregate cannot be seen to uniformly prefer either higher or lower dividends. Nevertheless, individual investors do h

23、ave strong preferences. Some prefer high dividends, while others prefer all capital gains. These differences among in dividends help explain why it is difficult to reach any definitive conclusions regarding the optimal dividend payout. Even so ,both evidence and logic suggest that investors prefer f

24、irms that follow a stable, predictable dividend policy. Because we discuss how dividend policy is set in practice, we must examine two other theoretical issues that could affect our view toward dividend policy: (1)the information content, or signaling, hypothesis and(2) The clientele effects. MM arg

25、ued that investors reactions to change in dividend policy do not necessarily show that investors prefer dividends to retained earnings. Rather, they argued that price change following dividend actions simply indicate that there is an important information, or signaling, content in dividend announcem

26、ents.The clientele effects to the extent that stockholders can switch, a firm can change from one dividend payout policy to another and then let stockholders who do not like the new policy sell to other investors who do. However, frequent switching would be inefficient because of(1)brokerage costs,(

27、2)the likelihood that stockholders who are selling will have to pay capital gains taxes, and (3) a possible shortage of investors who like the firms newly adopted dividend policy. Thus, management should be hesitant to change its dividend policy, because a change might cause current stockholders to

28、sell their stock, forcing the stock price down. Such a price decline might be temporary, but it might also be permanent if few new investors are attracted by the new dividend policy, then the stock price would remain depressed. Of course, the new policy might attract an even larger clientele than th

29、e firm had before, in which case the stock price would rise.In many ways, our discussion of dividend policy parallels our discussion of capital structure: we presented the relevant theories and issues, and we listed some additional factors that influence dividend policy, but we did not come up with

30、any hard-and-fast guidelines that manager can follow. It should be apparent from our discussion that dividend policy decisions are exercises in informed judgment, not decisions that can be based on precise mathematical model.In practice, dividend policy is not an independent decision the dividend de

31、cisions is made jointly with capital structure and capital budgeting decisions. The underlying reason for this joint decisions process is asymmetric information, which influences managerial actions in two ways: 1, In general, managers do not want to issue new common stock. First, new common stock in

32、volves issuance cost - - commissions, fees, and so on-and those costs can be avoided by using retained earnings to finance the firms equity needs. Also, asymmetric information causes investors to view common stock issues as negative signals and thus lowers expectations regarding the firms future pro

33、spects. The end result is that the announcement of a new stock issue usually leads to a decrease in the stock prices. Considering the total costs involved, including both issuance and asymmetric information costs, managers strongly prefer to use retained earnings as their primary source of new equity.2, Dividend ch