Company voluntary arrangement and Dividend irrelevancy theory: Difference between pages

Revision as of 07:08, 9 February 2015

In financial theory dividend payments and policies should be irrelevant when financial markets are efficient.

But in practice decisions about dividend levels are important because of:

Their informational content. This informational content is known as signalling.
The potential to move closer to, or away from, a firm's optimal capital structure.
Possibly, clientele effects.

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-''UK insolvency law.''
+In financial theory dividend payments and policies should be irrelevant when financial markets are efficient.
-(CVA).
+But in practice decisions about dividend levels are important because of:
-An agreement between a company and its creditors concerning the payment of its debts under the provisions of UK insolvency law.
+#Their informational content. This informational content is known as ''signalling''.
+#The potential to move closer to, or away from, a firm's optimal capital structure.
+#Possibly, [[clientele]] effects.
-The CVA may be initiated by the directors, the administrator or the liquidator of a company. If agreed to, it involves claims being settled at a given percentage of the full liability, with a view to the company surviving thereafter.
 == See also ==
-* [[Administrator]]
+* [[Lintner]]
-* [[Insolvency]]
+* [[Residual theory]]
-* [[Insolvency practitioner]]
+* [[Rights issue]]
-* [[Liquidator]]
+* [[Theoretical ex-rights price]]
+* [[Capital structure]]
-[[Category:Compliance_and_audit]]
+* [[Clientele]]