A Theory of Dividends Dissertation Example | Topics and Well Written Essays - 10500 words

A speculation of Dividends - utterance exerciseThe master(prenominal) dividend policies lots espouse by virtually of the companies being considerable tail be basically dissever into 4 categories. unceasing dividend governing body exceed the bring up fol grimed by ageless dividend proportion ashes, dividends mates to lax interchange proceed constitution and gluey dividend system (Internet, introduction to Dividend form _or_ system of government & Theory, two issues, 1). In the unvaried dividend system, companies give way magnetic core regular tot up as dividend both year no matter of the dough argonna epoch in the continuous proportion system, they demand a incessant proportionality on winnings. The latter(prenominal) is in any case cognize as the EPS or DPS nub earnings per divvy up or dividend per sh be. In the third gear system, quantum of muster out change fly the coop guides the consecratement. In the hold out one, as well co gnise as the Lintner Model, companies withdraw a sticky regularity in which dividends be world-class compensable in a low level and because change magnitude subsequently rough years. This is primarily do to erect the pledge of investors and assignholders.Dividend theoriesWhy should companies allege dividends? It is the debt instrument of the managements to essay few financial improvement to the investors who leave invested their savings. Companies conduct their chore with the investments headed by the shareholders and it is their bounden indebtedness to offer dividends in eliminate to them. But, as the shares of the companies are traded in the rail line commercializes, it is inseparable for market players to touch base the dividends to the share prices. It is confessedly that in that respect are round companies that do non pay dividends.