Discussion Post: Dividend Policy
Assume that you were recently hired by a national consulting firm, which has been asked to help Adams, Stores, Inc. prepare for its public offering. Prepare a presentation in which you review the theory of dividend policy and discuss the following:
o The terms "irrelevance," "bird-in-the-hand," and "tax preference" have been used to describe three major theories regarding the way dividend payouts affect a firm's value. Explain what these terms mean, and briefly describe each theory.
o What do the three theories indicate regarding the actions management should take with respect to dividend payout?
o What are stock repurchases? Discuss the advantages and disadvantages of a firm's repurchasing its own shares.
o What are stock dividends and stock splits? What are the advantages and disadvantages of stock dividends and stock splits?
The response should include a reference list. Using one-inch margins, Times New Roman 12 pnt font, double-space and APA style of writing and citations.