FNCE30002 Lecture 4: Payout Policy
27 Jun 2018
School
Department
Course
Professor
Hpw4 PayoutPdvy
MAMDiw.lMlevanceThewy
Div
policyshouldNOTaffectcompanyvalue
Assumptions ret inv plan unaffectedbydir decision
perfectlycompetitivecapitalmkts
rationalinvertors
FactorsaffectingtthefragmentofdividendsN
Revolution
ofuncertainty NOT
VAUD
4h
preference
forcurrentincome NOTvain
Imre transact
costs REASONABLE
Info
contentof
divsAinfoasymmetry REASONABLE
Agency costs REASONABLE
Tax underimputation diff tax Alatments
ofDuisvs CGaffecta
1h
preference
D
ingrained
up BYTE
Franking
credit tax Div
granduh
if CGT0then tyite preferdivs jtaste preferCG
special
divsuredto avoid signalling taxedlikedivs
DRPs allowhighdir wkloss
ofcash Invreceive
cash franking
creditsreino can
hhareBuybacke
Whenacompany
purchasesitsown shares on the
Nteckmkt then
cancelsthemLAus or
retainsthem as tearingstock Us
Regular Auscompanies canrefuronone
upto10 of
stockin 12month
period
Types equalaccess
selective buyback
buyback
non mht buyback
employee
share
scheme
buyback
min holding
Tax treatmentsdefend if an or off mht
On only CGT
off front cot part dir
WhybuybackI
Improved
performance measures Holdsifreturning FCE notifretting
wealth
producingants
signaling aundervaluation
Resource allocate Return
ofFees
Financial Flexibility non permanent distributors
lemplope shareoptions no ex airpricedropoff
lempiricaelevidencet
Dios
paidbyferinsWIhigher
permanent
operating of
Repurchases temporary non operating CF Amorevolatileleaddistribw
Repurchasefollowing
poorstockmkt
performance 4dirfollowing
good
performance
US
Off
mkt dirtfranking
creditswhen
buyback
islarger9
finisgenerating more of
Onwht medwhenfirmisundervalued
Factorsin buybackdecision Fce EPs level
of
frankingcredits
available A
