PAY OUT POLICY
HOW CORPORATION PAY OUT CASH TO
SHAREHOLDERS
Cash distributions by a firm to its stockholders can take one of
two basic forms: a cash dividend or a share repurchase.
DIVIDEND
• Definition: Dividend refers to a reward, cash or otherwise, that a
company gives to its shareholders. Dividends can be issued in various
forms, such as cash payment, stocks or any other form. A company’s
dividend is decided by its board of directors and it requires the
shareholders’ approval.
HOW FIRM PAY DIVIDENDS
STOCK SPLITS
THE INFORMATION CONTENT OF DIVIDENDS
AND REPURCHASES
DIVIDENDS OR REPURCHASES
• A dividend is a share of the profits that a company pays to its shareholders. A
share repurchase, on the other hand, involves a company buying back shares
that were previously sold in the market to members of the public.
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REPURCHASES AND THE DIVIDEND DISCOUNT
MODEL
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