公司理財(cái)本科班第八講紅利政策和資本結(jié)構(gòu)ppt課件

1、第八講 支付政策和資本構(gòu)造Corporate Finance.支付政策PAYOUT POLICYCorporate Finance.FACTS ABOUT PAYOUTCash Dividend versus Stock RepurchaseCash DividendDividends are rarely cut back, managers do not increase dividends unless confident that dividend can be maintainedStock RepurchaseRepurchases are more flexible and re

2、purchases are tax-advantaged.Dividend PaymentExxon Mobildeclares quarterly dividendof $.42 per shareShares start totrade ex- dividendDividend will be paidto shareholdersregisteredon this dateDividend checksmailedto shareholdersJanuary 5, 2021February 8, 2021February 10, 2021March 9, 2021Declaration

3、date公告Ex-dividend Date 除息日 Date that determines when stockholder is entitled to dividend paymentRecordDate 登記日Person who owns stock on this date receives dividendPaymentDate支付日.Forms of dividend paymentCash Dividend 現(xiàn)金分紅Special Cash Dividend Regular Cash DividendStock Dividend 送股Distribution of addi

4、tional shares to firms stockholdersStock Splits 股票拆細(xì)Issue of additional shares to firms stockholders No Effect on firm value.Share RepurchaseFour methodsBuy Shares on the Open MarketTender Offer to Shareholders 要約收買，20% over-priceDutch Auction荷蘭式拍賣，投資者報(bào)出賣股數(shù)Private Negotiation (greenmail).Dividend Pa

5、yment vs Share RepurchaseShare Repurchase acts like bumper dividends (逆回購充任緩沖器): 企業(yè)運(yùn)營好時(shí)，積累大量未運(yùn)用資金，經(jīng)過逆回購改動(dòng)資本構(gòu)造。經(jīng)濟(jì)昌盛時(shí)股票逆回購較多。Dittmar and Dittmar 2004:Repurchases increase with increases in both permanent and transitory earnings. Change in dividends paid is not related to transitory earnings but rather

6、 only permanent shifts in earnings that result from changes in the macro-economy.Research approachStep1:Tempory earnings: cointegration residualPermanent earnings: impact that changes of GDP have on aggregate payout policyStep 2:Investigate relation between changes in stock repurchase (dividend) and

7、 earnings.Information content of dividend and repurchasesDividend stock repurchase decisions contain information Dividend increases could mean overpriced stock or increased future profits Stock repurchase could mean underpriced stock or increased future profits Signal varies based on prior informati

8、on about company.Is payout relevant？.Middle-of-the-road party (中間派)Dividend policy is irrelevant in perfect capital marketModigliani and Miller:.Rightist 保守派Dividends increase valueDividend increases send good news about cash-flow earningsDividend cuts send bad newsHigh-dividend payout policy will b

9、e costly to firms that do not have cash flow to support itDividend increases signal companys good fortune Increase in managers confidence in future cash flow.Leftist 激進(jìn)派The Dividend Clientele Hypothesis: Evidence from the 2003 Tax Act (Kawano, 2021, American Economic Journal: Economic Policy); Do di

10、vidend clienteles exist? Evidence on dividend preferences of retail investors (Graham and Kumar , 2006, Journal of Finance); Local Dividend Clienteles (Becker et al., 2021, Journal of Finance) ; Juicing the dividend yield (Harris et al., 2021, Journal of Financial Economics).Shareholders in high tax

11、 brackets prefer low-dividend paying stocks and shareholders in low tax brackets prefer high-dividend paying stocks.假設(shè)紅利應(yīng)稅稅率高于資本利得應(yīng)稅稅率，公司就應(yīng)盡能夠少發(fā)紅利，以留存現(xiàn)金或回購股票。.ConclusionHigh dividend paying stocks will be preferred by tax exempt organizations and low income investors; those stocks yielding more of t

12、heir return in the form of capital gains will gravitate to the taxpayers in the upper tax brackets (Miller 1977).資本構(gòu)造CAPITAL STRUCTURECorporate Finance.MM and Pecking Order Theorem“ M-M實(shí)際 “啄食順序?qū)嶋H “內(nèi)源融資間接融資債務(wù)融資.Modigliani and Miller (MM)Proposition 1: MM 第一定理Capital structure does not affect cash flo

13、w as No taxesNo bankruptcy costsNo effect on management incentives .Modigliani and Miller (MM)Proposition 1: MM 第一定理Capital structure does not affect cash flow as No taxesNo bankruptcy costsNo effect on management incentives .Proposition I and MM In perfect market, leverage has no impact on operatin

14、g income and market value of all securities.Proposition II and MM In perfect market, expected rate of return on common stock of a levered firm increases in proportion to the debt-equity ratio (D/E), expressed in market values.Financial risk and expected returnsProposition II and MMWhen the firm is l

15、evered, share holders require a premium of (rA rD)*D/E.An example for leverage riskMarket value of firm:10000 USDNo levered firm: 10 USD * 1000 sharesLevered firm: borrow 5000 USD through debt with interest rate 10%, then purchase 500 shares at 10 USD.Leverage and cost of equity.Leverage and cost of

16、 equity.Weighted-Average Cost of Capital (WACC) .PROPOSITION II and MM.WACC TRADITIONAL VIEW.After-Tax WACCDebt ratio = (D/V) = 7.6/22.6= .34 or 34%Equity ratio = (E/V) = 15/22.6 = .66 or 66%.After-Tax WACC.Leverage risk and betas .Why firms use leverage?Tax-deductible interestThe tax deductibility

17、of interest increases the total income that can be paid out to bondholders and stockholders.Tax-deductible interest.Corporate taxes-ExampleYou own all equity of Space Babies Diaper Co.Company has no debt Company has annual cash flow of $900,000 before interest and taxesCorporate tax rate is 35% At t

18、ime zero, you have the option to exchange 1/2 of your equity position for 5% bonds with face value of $2,000,000. Assume RE for unlevered firm equals to 5% as well.Should you do this and why?.Corporate taxes-Examples Example ContinuedTotal Cash Flow All equity = 585*1/2 debt = 620 (520 + 100).Corpor

19、ate taxes-permanent effect*0.05.Corporate taxesExampleAll-equity value = 585/.05 = 11,700,000PV tax shield = 700,000Firm value of debt = $12,400,000.Costs of financial distress rDEBond YieldStructure of Bond Yield Rates.Costs of financial distress: Traditional View of WACC Without Taxes DVrErrDInclu

20、des Bankruptcy RiskFinancial distress occurs when promises to creditors are broken or honored with difficulty. .Costs of financial distress Cost of Financial DistressCosts arising from bankruptcy or distorted business decisions before bankruptcy Market Value Equals Value If:All-equity financed + PV

21、tax shield PV costs of financial distress .DebtMarket Value of the FirmValue ofunleveredfirmPV of interesttax shieldsCosts offinancial distressValue of levered firmOptimal amount of debtMaximum value of firmCosts of financial distress .Direct costs of financial distress Circular File company has $50

22、 of one-year debt .Costs of financial distress Circular File Company has $50 of one-year debt Why does equity have any value?Shareholder option to obtain rights to assetsby paying $50 debt.Indirect costs of financial distress Circular File Company invests $10, assumes a discount rate of 50% for the

23、projectAssume NPV of project is (=$-2)What is effect on market values?.Costs of financial distress Circular File Company Value, Post-Project Firm value falls by $2Equity-holder gains $3.Costs of financial distress Circular File Company Value Assumes safe project with NPV = $5Firm value rises and lac

24、k of potential payoff for shareholders causes decrease in equity value .Costs of financial distressHenrietta Ketchup has two possible investment projects .PECKING ORDER OF FINANCIAL CHOICES 金融選擇中的啄食順序?qū)嶋HTrade-Off Theory Theory that capital structure is based on trade-off between tax savings and distr

25、ess costs of debt Pecking-Order Theory Theory stating firms prefer to issue debt over equity if internal finances are insufficient .PECKING ORDER OF FINANCIAL CHOICESTrade-Off Theory and PricesStock-for-debt exchange offers results in stock price falling Inversely, debt-for-stock exchange offers res

26、ults in stock price rising Issuing common stock drives down stock prices, whereas repurchases increase stock pricesIssuing straight debt has small negative impact .PECKING ORDER OF FINANCIAL CHOICESIssues and Stock Prices Why do security issues affect stock prices when demand for firms securities sh

27、ould be flat?Any firm is drop in bucket Plenty of close substitutes Large debt issues do not significantly depress stock price .PECKING ORDER OF FINANCIAL CHOICESPecking-Order Theory Firms prefer internal financeAdapt target dividend payout ratios to investment opportunities while avoiding changes i

28、n dividends .PECKING ORDER OF FINANCIAL CHOICESPecking-Order TheoryInternally generated cash flows sometimes more than capital expenditures, other times notDue to dividend policies, plus fluctuations in profitability and investment opportunitiesIf more, firm pays off debt or invests in marketable se

29、curities If less, firm first draws down cash balance or sells marketable securities.PECKING ORDER OF FINANCIAL CHOICESPecking-Order TheoryIf external finances are required, firms issue the safest security firstThey start with debt then possibly hybrid securities, such as convertible bonds, then equi

30、ty as a last resort.PECKING ORDER OF FINANCIAL CHOICESPecking-Order Theory Internal equity may be better than external equityFinancial slack is valuable If external capital is required debt is betterThere is less room for difference in opinions about what debt is worth.Firm Valuation and capital str

31、uctureCapital Project AdjustmentsDiscount rateModify to reflect capital structure, bankruptcy risk, other factorsPresent valueAssume firm financed entirely by equity, make adjustments to value based on financing.After-tax weighted-average cost of capitalTax-Adjusted Formula.Example: Sangria Corporat

32、ionFirm has marginal tax rate of 35%. Cost of equity is 12.4%, pretax cost of debt is 6%. Given book and market-value balance sheets, what is tax-adjusted WACC?After-tax weighted-average cost of capital.Example, ContinuedAfter-tax weighted-average cost of capital.After-tax weighted-average cost of c

33、apitalExample, ContinuedDebt ratio = (D/V) = 500/1,250 = .4, or 40%Equity ratio = (E/V) = 750/1,250 = .6, or 60%.After-tax weighted-average cost of capitalExample, ContinuedSangria wants to invest in machine with cash flows of $1.731 million per year pre-tax. What is value of machine, given initial

34、investment of $12.5 million?.After-tax weighted-average cost of capitalExample, Continued.After-tax weighted-average cost of capitalExample, Continued.After-tax weighted-average cost of capitalExample, Continued.Valuing businessesBusiness value usually computed as discounted value of future cash flo

35、ws (FCF) to a valuation horizon (H)Horizon value is also called terminal value.Valuing businessesPV (free cash flows)PV (horizon value)In this case, r = WACC.Free-cash-flow projections, rio corporation ($ Millions).Free-cash-flow projections, rio corporation ($ Millions).Valuing businessesExample: R

36、io CorporationFree cash flow = profit after tax + depreciation investment in fixed assets investment in working capitalFCF = 8.7 + 9.9 (109.6 95) (11.6 11.1) = $3.5 million.Valuing businessesExample, Continued.Valuing businessesFlow-to-Equity MethodDiscount cash flows to equity at cost of equity cap

37、ital, after interest and taxesIf firm has constant debt ratio over time, flow to equity will give same answer as discounting total cash flows at WACC and subtracting debt.Using WACC in practiceAfter-Tax WACCPreferred stock and other forms of financing must be included in formula.Using WACC in practi

38、ceExample, ContinuedCalculate WACC for Sangria Corporation given preferred stock is $25 million of total equity and yields 10%.Using WACC in practiceDetermining Costs of FinancingDerive return on equity from market dataCost of debt set by market, rating of firms debtPreferred stock often has preset dividend rate.Example: Sangria CorporationFirm has marginal tax rate of 35%