DIVIDEND AND VALUATION
Dividend Capitalization Model According to Gordon, the market value of a share is equal to the present value of future streams of dividends. A simplified version of Gordon’s model can be symbolically, expressed as TABLE Dividend Policy and Value of Shares of...
DIVIDEND AND VALUATION
Arguments It can be seed from the assumptions of Gordon’s model that they are similar to those of Walters model. As a result, Gordon’s model, like Walter’s, contends that dividend policy of the firm is relevant and that investors put a positive...
DIVIDEND AND VALUATION
Gordon(s) Model Another theory which contends that dividends are relevant is Gordon’s model. This model, which opines that dividend policy of a firm affects its value, is based on the following assumptions: 1. The firm is an all equity firm. No external...
DIVIDEND AND VALUATION
...
DIVIDEND AND VALUATION
TABLE Dividend Policy and Value of Shares (Walters Model) [vfb id=1]
DIVIDEND AND VALUATION
RELEVANCE OF DIVIDENDS In sharp contrast to the MM position, there are some theories that consider dividend decisions be an active variable in determining the value of a firm. The dividend decision is, therefore, relevant. We critically examine below two theories...
