Dividendepolitikk

Question 1

Hva menes med M&M ‘homemade dividend policy’?

Answer 1

3
M&M ‘homemade dividend policy’
 The M&M world:
– neutral taxation
– no transaction costs
– symmetric information
– no agency costs

 Investors may change a company’s effective
dividend policy through portfolio rebalancing,
– increase (decrease) dividends by selling
(buying) shares

 Two otherwise identical firms with different
dividend policy must have identical market values

Question 2

Vil dividendepolitikk skape verdier for selskapet?

Answer 2

Financial transactions: NPV = 0

 Given operating and investment policy, and capital
structure, changes in dividend policy will imply
NPV = 0 sales/purchases in the financial market

Question 3

Hva impliserer høy og lav dividende?

Answer 3

Higher dividends –> equity issue (sell securities)

 Lower dividends –> repurchase shares (buy securities)

Det gir at verdien av egenkapitalen er summen av all FCFE diskontert med kapitalkravet til egenkapitalen.

Dette svarer til antall aksjer * prisen per aksje.

Dette svarer til summen av antall aksjer idag * dividende på tidspunkt t, neddiskontert med kapitalkravet til ek.

Question 4

Hvordan kan FCFE beregnes direkte ved bruk av gamma?

Answer 4

FCFE = NI - (1-gamma) * (FCF - NI)

der gamma = net debt / CE.

Question 5

Hvilke effekter har vi av dividendepolitikk i den virkelige verden?

Answer 5

Dividend policy effects in the real world:

1. Investor Taxes

– cash dividends taxed higher,
– and capital gains may be delayed

2. Transaction costs

– investors: buying / selling shares
– company: high direct costs of issuing shares

3. Asymmetric information

– cash dividend change may be a powerful signal, stock
repurchases are less so
– selling new equity: a “sell” signal

4. Agency costs

– too much FCF: over investment vs
– too little: under investment

Question 6

Hvilken trade-off har vi når det gjelder dividendepolitikk?

Answer 6

7
Dividend policy: Trade-offs

 Costs of too much dividends
– stockholders pay too high taxes
– needs to issue new shares, or
– may have to cut future dividends, or
– may forego growth opportunities

 Costs of too little dividends
– too much free cash flow

Question 7

Hvilke determinanter har vi ved dividendepolitikk?

Answer 7

Determinants of dividend policy

 Earnings: level, growth, and stability

 Investment Opportunities

 Alternative sources of funding

 Financial leverage

 Signalling incentives

 Stockholder characteristics
– clientele effects

Question 8

Gjør rede for dividend payout i ulike industrier i usa.

Answer 8

Se utklippsnotater.

Question 9

Hvilke empiriske bevis har vi om dividendepolitikk?

Answer 9

Empirical evidence on dividend policy

 Dividends tend to follow Earnings,

 but a smoothed path, and

 are sticky (ratchet)

 Dividend Policy follow company’s life cycle,

 and is affected by the riskiness of it’s free cash flow

 US: fewer dividend paying firms

 Strong increase in the use of stock repurchases
− protect management against unfriendly takeovers
− reduce financial investments
− reduce owners’ taxes (relative to cash dividends)

Julio & Ikenberry; ”Reappearing dividends”; JACF fall 04

Question 10

Redegjør for dividende og earningsfor store selskaper på oslo børs.

Answer 10

Se utklippsnotater.

Question 11

Hva er fordelen med å kjøpe tilbake aksjer fremfor å utbetale cash dividende?

Answer 11

Repurchase of shares vs cash dividends

 Tax benefits, and

 more flexibility for owners

 More flexibility for company (information signal),

 but may increase free cash flow problems

 Signal a depressed price?

 More often, highly correlated with the stock price
 Executive Options ?