Page 294 - DMGT405_FINANCIAL%20MANAGEMENT

Financial Management Rupesh Roshan Singh, Lovely Professional University

Notes Unit 14: Management of Surplus & Dividend Policy

CONTENTS
Objectives
Introduction

14.1 Management of Profits
14.2 Dividend Policy
14.2.1 Types of Dividend Policies
14.2.2 Factors affecting Dividend Decisions

14.3 Theories of Dividend Decisions
14.3.1 Traditional Approach
14.3.2 Walter’s Model
14.3.3 Gordon’s dividend Capitalization Model

14.3.4 Miller and Modigliani Model
14.3.5 Rational Expectations Model
14.4 Forms of Dividends
14.4.1 Bonus Shares (Stock Dividend)

14.4.2 Stock (Share) Split
14.4.3 Stock Repurchase
14.5 Corporate Dividend Behaviour
14.5.1 Legal and Procedural Aspects in Connection with Payment of Dividend

14.6 Summary
14.7 Keywords
14.8 Review Questions
14.9 Further Readings

Objectives

After studying this unit, you will be able to:
 Discuss the connotation of management of profits
 Describe the various aspects of dividend policy
 Explain the theories of dividend
 Recognize the corporate dividend behaviour

Introduction

Finance is the life-blood of business, without which a firm cannot promote, maintain and expand
and achieve its predetermined objective. Whether it is big, medium or small it needs finance.

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