Dividends and Dividend Policy

The intricacies of dividends and dividend policy can leave even the most seasoned financial professional feeling a little uneasy. While conventional wisdom suggests that paying dividends affects both shareholder wealth and the firm's ability to retain earnings to exploit growth opportunities, much debate still surrounds this dynamic discipline-especially when it comes to how dividend decisions can lead to value maximization. That's why Dividends and Dividend Policy, part of the new Robert W. Kolb Series in Finance, has been created. Designed for those who want to gain a firm understanding of the fundamental concepts related to dividends and dividend policy, this reliable resource-with Professor H. Kent Baker as its editor-comprises contributions from both well-regarded academics and financial experts who are familiar with the various aspects of this field. Divided into six comprehensive parts, this timely guide opens with an extensive overview of the history, trends, and determinants of dividends and dividend policy. Here, essential issues, such as the phenomenon of disappearing and reappearing dividends and how dividends are associated with several firm characteristics, are discussed in detail, and valuable insights are shared on the dividend policies of foreign firms as well as other legal and regulatory regimes. After this informative introduction, Dividends and Dividend Policy shifts its focus to one of the most important questions in this arena: How do corporate decisions on distribution policy affect shareholder wealth? Using evidence from various methods including survey research, the authors describe managers' views on dividends and how they make dividend policy decisions. Along the way, they also examine how researchers have attempted to model dividend behavior mathematically and relate dividend policy to share prices. While this book concentrates mainly on dividends and share repurchases-because these are the principal mechanisms by which corporations distribute cash to shareholders-many other dividend-related topics are also covered including special dividends, dividend reinvestment plans, stock splits and stock dividends, corporate governance, and dividend policies abroad. Despite decades of research, we still don't have all the answers to the dividend puzzle. But with the information and theories outlined throughout these pages-from the determining factors of a payout policy to agency, signaling, life-cycle, and catering theories of dividends-this book will help put one of the most intriguing areas of corporate finance in perspective.