Management and Organizational Studies 2310A/B Chapter Notes - Chapter 17: Dividend Policy, Dividend, Liquidating Distribution

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Shang Tang

Document Summary

Special dividend- similar to an extra cash dividend but viewed by the market as one-time event. Liquidating dividend- some or all of the business has been sold: declaration date- board declares the dividend and it becomes a liability of the firm, ex-dividend date- occurs 2 business days before the date of record. If you buy stock on or after this date, you will not receive the dividend. Stock price generally drops by about the amount of the dividend: date of record- holders of record are determined and they will receive the dividend payment, date of payment- cheques are mailed, example, price behaviour around ex-dividend date. Individuals in upper income tax brackets might prefer lower dividend payouts, with the immediate tax consequences, in favor of higher capital gains. Real-world factors favouring a high payout: why might a high payout be desirable, skeptical of companies future performance- want larger dividend earlier, desire for current income.