Dividend policy may be affected by firm level as well as macroeconomic level factors. Select FIVE variables (at least 2 firm-level factors/variables and at least 2 macroeconomic factors/variables) from the list shown below. Explain and discuss the predicted impact of selected factors on dividend policy using relevant theories. i.e. what theories help to predict the positive or negative impact on the dividend payout and why. FIRM-LEVEL FACTOR/VARIABLE Asset growth rate Positive NPV investment opportunities Capital intensity of the production process Free cash flow generated Number of individual shareholders Relative tightness of ownership coalition Size of largest block holder
Dividend policy may be affected by firm level as well as macroeconomic level factors. Select FIVE variables (at least 2 firm-level factors/variables and at least 2 macroeconomic factors/variables) from the list shown below. Explain and discuss the predicted impact of selected factors on dividend policy using relevant theories. i.e. what theories help to predict the positive or negative impact on the dividend payout and why. FIRM-LEVEL FACTOR/VARIABLE Asset growth rate Positive NPV investment opportunities Capital intensity of the production process Free cash flow generated Number of individual shareholders Relative tightness of ownership coalition Size of largest block holder
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Dividend policy may be affected by firm level as well as macroeconomic level factors. Select FIVE
variables (at least 2 firm-level factors/variables and at least 2 macroeconomic factors/variables)
from the list shown below. Explain and discuss the predicted impact of selected factors on dividend
policy using relevant theories. i.e. what theories help to predict the positive or negative impact on
the dividend payout and why.
FIRM-LEVEL FACTOR/VARIABLE
Asset growth rate
Positive NPV investment opportunities
Capital intensity of the production process
Free cash flow generated
Number of individual shareholders
Relative tightness of ownership coalition
Size of largest block holder
MACROECONOMIC FACTOR/VARIABLE
Transaction costs of security issuance
Personal tax rates on dividend income
Personal tax rates on capital gain
Importance of institutional investors
Corporate governance power of institutional investors
Capital market, relative to intermediated (bank)
financing
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