1、外文翻译股利政策外文文献翻译译文一、外文原文原文：Dividend policyProfitable companies regularly face three important questions: (1) How much of its free cash flow should it pass on to shareholders? (2) Should it provide this cash to shareholders by raising the dividend or by repurchasing stock? (3) Should it maintain a stab
2、le, consistent payment policy, or should it let the payments vary as conditions change?When deciding how much cash to distribute to shareholders, finance manager must keep in mind that the firms objective is to maximize shareholder value. Consequently, the target pay rate ratiodefine as the percenta
3、ge of net income to be paid out as cash dividendsshould be based in large part on investors preference for dividends versus capital gains: do investors prefer (1) to have the firm distribute income as cash dividends or (2) to have it either repurchase stock or else plow the earnings back into the bu
4、siness, both of which should result in capital gains? This preference can be considered in terms of the constant growth stock valuation model: If the company increases the payout ration, the raises.This increase in the numerator, taken alone, would cause the stock price to rise. However, ifis raised
5、, then less money will be available for reinvestment, that will cause the expected growth rate to decline, and that will tend to lower the stocks price. Thus, any change in payout policy will have two opposing effects. Therefore, the firms optimal dividend policy must strike a balance between curren
6、t dividends and future growth so to maximize the stock price. In this section, we examine three theories of investor preference: (1)the dividend irrelevance theory, (2)the bird-in-the-hand theory ,and(3) the tax preference theory. DIVIDEND IRRELEVANCE THEORY It has been argued that dividend policy h
7、as no effect on either the price of a firms stock or its cost of capital. If dividend policy has no significant effects, then it would be irrelevance .The principal proponents of dividend irrelevance theory are Merton Miller and Franco Modigliani(MM).They argued that the firms is determined only by
8、its basic earning power and its business risk. In other words, MM argued that the value of firm depends only on the income produced by its assets, not on how this income is split between dividends and retained earnings. To understand MMs argument that dividend policy is irrelevance, recognize that a
9、ny shareholder can in theory construct his or her own dividend policy .If investors could buy and sell shares and thus create their own dividend policy without incurring costs, then the firms dividend policy would truly be irrelevant. Note, though, that investors who want additional dividends must i
10、ncur brokerage cost to sell shares, and investors who do not want dividends must first pay taxes on the unwanted dividends and then incur brokerage cost to purchase shares with the after-tax dividends. Since taxes and brokerage costs certainly exist, dividend policy may well be relevant.In developin
11、g their dividend theory, MM made a number of assumptions especially the absence of taxes and brokerage costs. Obviously, tax and brokerage costs do exist, so the MM irrelevance theory may not be true. However, MM argued that all economic theories are based on simplifying assumptions, and that the va
12、lidity of a theory must be judged by empirical test, not by the realism of its assumptions.BIRD-IN-THE-HAND THEORYThe principal conclusions of MMs dividend irrelevance theory is that dividend policy does not affect the required rate of return on equity, Ks. This conclusion has been hotly debated in
13、the academic circles .In particular, Myron Gordon and John Lintner argued that Ks decreases as the dividend payout is increase because investor are less certain of receiving the capital gains which are supposed to result from retaining earnings than they are of receiving dividend payments MM disagre
14、ed .They argued that Ks independent of dividend policy, which implies that investors are indifferent between D1/P0 and g and, hence, between dividends and capital gains. MM called the Gordon-Lintner argument the bird-in-the-hand fallacy because, in MMs view, most investors plan to reinvest their div
15、idends in the stock of the same or similar firms, and, in any event, the riskiness of the firms cash flows to investors in the long run is determined by the riskiness of operating cash flows, not by dividend payout policy.TAX PREFERENCE THEORYThere are three tax-related reasons for thinking that inv
16、estors might prefer a low dividend payout to a high payout: (1) Recall from Chapter II that long-term capital gains are taxed at a rate of 20 percent, whereas dividend income is taxed at effective rates which go up to 39.6 percent. Therefore, wealthy investors might prefer to have companies retain a
17、nd plow earnings back into the business. Earnings growth would presumably lead to stock prices increases, and thus low- taxed capital gains would be substituted for higher-taxed dividends. (2)Taxes are not paid on the gains until a stock is sold. Due to time value effects, a dollar of taxes paid in
18、the future has a lower effective cost than a dollar paid today. (3) If a stock is held by someone until he or she dies, no capital gains tax is due at all-the beneficiaries who receive the stock can use the stocks value on the death day as their cost basis and thus completely escape the capital gain
19、s tax.Because of these tax advantages, investors may prefer to have companies retain most of their earnings. IF so, investors would be willing to pay more for low-payout companies than for otherwise similar high- payout companies.There three theories offer contradictory advice to corporate managers,
20、 so which, if any, should we believe? The most logical way to proceed is to test the theories empirically. Many such tests have been conducted, but their results have been unclear. There are two reasons for this(1)For a valid statistical test, things other than dividend policy must be held constant;
21、 that is, the sample companies must differ only in their dividend policies, and(2)we must be able to measure with a high degree of accuracy each firms cost of equity. Neither of these two conditions holds: We cannot find a set of publicly owned firms that differ only in their dividend policies, nor
22、can we obtain precise estimates of the cost of equity.Therefore, no one can establish a clear relationship between dividend policy and the cost of equity. Investors in the aggregate cannot be seen to uniformly prefer either higher or lower dividends. Nevertheless, individual investors do have strong
23、 preferences. Some prefer high dividends, while others prefer all capital gains. These differences among in dividends help explain why it is difficult to reach any definitive conclusions regarding the optimal dividend payout. Even so ,both evidence and logic suggest that investors prefer firms that
24、follow a stable, predictable dividend policy. Because we discuss how dividend policy is set in practice, we must examine two other theoretical issues that could affect our view toward dividend policy: (1)the information content, or signaling, hypothesis and(2) The clientele effects. MM argued that i
25、nvestors reactions to change in dividend policy do not necessarily show that investors prefer dividends to retained earnings. Rather, they argued that price change following dividend actions simply indicate that there is an important information, or signaling, content in dividend announcements.The c
26、lientele effects to the extent that stockholders can switch, a firm can change from one dividend payout policy to another and then let stockholders who do not like the new policy sell to other investors who do. However, frequent switching would be inefficient because of(1)brokerage costs,(2)the like
27、lihood that stockholders who are selling will have to pay capital gains taxes, and (3) a possible shortage of investors who like the firms newly adopted dividend policy. Thus, management should be hesitant to change its dividend policy, because a change might cause current stockholders to sell their
28、 stock, forcing the stock price down. Such a price decline might be temporary, but it might also be permanent if few new investors are attracted by the new dividend policy, then the stock price would remain depressed. Of course, the new policy might attract an even larger clientele than the firm had
29、 before, in which case the stock price would rise.In many ways, our discussion of dividend policy parallels our discussion of capital structure: we presented the relevant theories and issues, and we listed some additional factors that influence dividend policy, but we did not come up with any hard-a
30、nd-fast guidelines that manager can follow. It should be apparent from our discussion that dividend policy decisions are exercises in informed judgment, not decisions that can be based on precise mathematical model.In practice, dividend policy is not an independent decision the dividend decisions is
31、 made jointly with capital structure and capital budgeting decisions. The underlying reason for this joint decisions process is asymmetric information, which influences managerial actions in two ways: 1, In general, managers do not want to issue new common stock. First, new common stock involves iss
32、uance cost - - commissions, fees, and so on-and those costs can be avoided by using retained earnings to finance the firms equity needs. Also, asymmetric information causes investors to view common stock issues as negative signals and thus lowers expectations regarding the firms future prospects. Th
33、e end result is that the announcement of a new stock issue usually leads to a decrease in the stock prices. Considering the total costs involved, including both issuance and asymmetric information costs, managers strongly prefer to use retained earnings as their primary source of new equity.2, Dividend changes provid
