Abstract: This chapter describes the dividend policy. Considerations Dividends are the only cash inflows that a shareholder is entitled to, and capital gains should occur solely because of prospects for enhanced dividends sometime in the future. If, conceptually at least, the stream of future dividends is to be viewed as the prime determinant of share values, and the question of how investors ought to value alternative dividend policies is of obvious importance. One needs to assess how a firm should decide on the proportion of earnings to be retained for reinvestment and, consequently, the proportion to be paid out in dividends. The existence of efficient financial markets and the objective of maximizing share prices in such markets enable to make financial decisions without regard to individual shareholder preferences.
Publication Year: 1988
Publication Date: 1988-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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