International finance strategy Essay Example | Topics and Well Written Essays - 2250 words

International finance dodge - Essay ExampleDividend policy pertains to the practice of companys management in providing dividend payments or fetching finishs related to the pattern and size of dividend cash distributions, which are to be made by the company to its shareholders (Nissam and Ziv, 2001).This decision to distribute company profits is critical for the company as it influences the not bad(p) twist as easy as the stock prices. There are three basic contradictory theories in relation to dividend policies of firms. The foremost view in this regard claims that increase in dividend payments help to improve firm value. This is the bird in hand argument. The second view postulates that high pay egresss in the form of dividends grow a conflicting gear up on value of firm and is known as the tax preference argument. The third view is the dividend irrelevance hypothesis, which asserts that dividend decisions are irrelevant and dividend policy decision has no significant effec t on the firm.Corporate managers squander been able to realize that dividend payments are necessary to satisfy expectations of the company shareholders. They have tried to smooth out dividends over a long period of time because it is believed that reducing dividends might uphold an unfavourable consider of the company to its shareholders. Hence, dividends are also used to give signals to the market about company performance and stability. Dividend policies have a huge impact on a companys stock prices. There has been an on-going debate regarding the impact of a firms dividend policy over its value and capital structure decisions since 1950s. The following sections shall discuss the issue in detail.In financial terms, the capital structure is a modelling based on which a company finances the assets in combination of equity, debt and hybrid form of securities. The capital structure of a company is simply the formation of a companys liabilities.According to