fin test #3 section #4

decrease

information of expected earnings

implications of dividends for taxes and agency costs

surprising investors to regard to dividend policy

a long term residual

statutory restrictions may prevent a company from paying dividends

debt and preferred stock contracts may impose constraints on dividend policy

• may prevent a company from paying dividends by: a) firm's liab > assets
• b) dividend > RE (accum profits)
• c) if dividend is being paid from cap invested in firm

firm may show RE but it must have cash to pay dividends... firm can still be extremely profitable and still be cash poor b/c dividends are paid with cash and not RE

a firms with stable and predictable earnings is more likely to pay larger dividends

ownership of common stock gives voting rights

quarterly basis, final approval comes from firm's board of directors

the date when the dividend is formally declared by the bard of directors

investors shown to own stocks on this date received the dividend

two working days prior to date of record. shareholders buying stock on or after ex-dividend date won't receive dividends

date when dividend checks are mailed