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Dividend Policy

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Dividend policy
Standards by which a firm determines the amount of money it will pay as dividends.

Dividend Policy
The amount of a dividend that a publicly-traded company decides to pay out to shareholders. The dividend policy may change from time to time. Factors affecting a dividend policy include the company's earnings for the relevant period and its expected performance in the near future. Many companies, especially startups, have a rather stingy dividend policy because they plow back much of their earnings into further development. Established companies, such as blue chips, tend to have relatively liberal dividend policies. However, some research, notably Miller and Modigliani's irrelevance proposition, suggests that a company's dividend policy does not impact its performance in any way. See also: Dividend clientele, Signaling approach (on dividend policy).


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According to Company's current dividend policy and Israeli law, an annualdividend will only be declared and paid if, in the discretion of the Board ofDirectors, there is no reasonable foreseeable concern that the distributionwill prevent the Company from being able to meet the terms of Company'sexisting and contingent liabilities, as and when due all based on Company'sneeds as will be determined from time to time.
In this paper, we study how informational asymmetries affect firms' dividend policies by examining the relation between a firm's dividend policy and the quality of its information environment.
The factors that affect dividend policy in developed stock markets seem to apply for this emerging market.
 
 
 
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