26 dividend policy case the new wave corporation

All this being said, my suggestion would be to issue a partial stock repurchase in the open market to avoid paying a premium based on the amount of excess capital realized by a residual dividend policy; with the remaining capital, issue dividends.

dividend policy theories pdf

First, people are trying to eat more and more healthy food. Hence, it is argued that it is the majority shareholder groups desires that should be met by a firm when making dividend policy decisions.

Thus, there isnt enough information to state what sort of dividend policy would be best suited for New Wave. And should Stark revise her investment recommendation? How does a residual dividend policy work?

Additionally, a number of shareholders of the firm may not understand the importance of the firm internalizing profits in order to increase the value of the company and therefor maximize shareholder wealth. Furthermore, since the dividend would benefit the bulk of the shareholders, this decision has the potential to not only increase investor wealth but further promote confidence in the firm — theoretically incentivizing shareholders to reinvest their earnings back into the firm.

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26 Dividend Policy Case The New Wave Corporation Free Essays