BU393 Chapter Notes - Chapter 19: Executive Compensation, Liquidating Distribution, Retained Earnings
Document Summary
The term dividend usually refers to cash distributions of earnings. Regular cash dividends dividends issued four times a year. Sometimes firms pay a regular cash dividend and an extra cash dividend. Paying a cash dividend reduces corporate cash and retained earnings shown on the balance sheet except in the case of a liquidating dividend. Stock dividend a dividend that is paid out in shares of stock. Stock split increases the number of shares outstanding. Standard method of cash dividend payment: declaration date, date of record, ex-dividend date, date of payment. Instead of paying dividends, a firm may use cash to repurchase shares of its own stock. Real world considerations: flexibility, executive compensation, offset to dilution, repurchase as investment, taxes. Implies that the two sets of factors are likely to cancel each other out after all. Clienteles groups of investors attracted to different payouts. What we know and do not know about dividend policy.
