Managerial Incentives (not sources of gains for SH) for Mergers
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-to run a bigger firm "perks"
-to diversify his/her human capital
economies of scale
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opportunity to spread fixed costs across a larger volume of output
Irrelevancy theory (MM 1961)
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-dividend policy is irrelevant because changes in dividend policy do not
affect the firm value or the SH wealth
-this theory assumes a perfect capital market
clientele effect
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-typical investors need dividends to satisfy their consumption needs
-implication: if dividends increase, then stock price would increase
M&M 1963- when corporate taxes are considered
Give this one a try later!
Give this one a try later!
-to run a bigger firm "perks"
-to diversify his/her human capital
economies of scale
, Give this one a try later!
opportunity to spread fixed costs across a larger volume of output
Irrelevancy theory (MM 1961)
Give this one a try later!
-dividend policy is irrelevant because changes in dividend policy do not
affect the firm value or the SH wealth
-this theory assumes a perfect capital market
clientele effect
Give this one a try later!
-typical investors need dividends to satisfy their consumption needs
-implication: if dividends increase, then stock price would increase
M&M 1963- when corporate taxes are considered
Give this one a try later!
