Why companies pay dividend Essay Example | Topics and Well Written Essays - 1500 words

Why companies pay dividend - leaven ExampleThe different tax treatment between dividends and capital gains however generally work against the former. A number of companies pay dividends and in some, it is a given in the way their organizations argon run. This paper allow for explore wherefore anyone cares about it at all. Specifically, this paper will address the questions why companies pay dividends why investors pay attention to it do dividends affect an organizations value and how do managers use dividends in the organizational financial management among others. The idea is to identify whether dividends have any bearing or force play on an organization particularly in terms of equity and firm value.The survey on the underway dividend literature provided in the following section is particularly focused on the areas related to the positive and cast out characteristics of dividends to business organizations. Such outline of studies was aimed at determining how other scholars a nswered the question posed by this paper. The review summarizes the current studies and research on dividends policy, particularly. An important dimension to the review, however, which would have a pivotal effect on this paper as a whole was the passage of the Jobs and Growth Tax Relief Reconciliation Act.The lead of literature available in regard to corporate payout policy and dividends is extensive. However, this review would focus on both major areas why do dividends matter for corporations and does it matter how business organizations distribute cash to its shareholders.Miller and Modigliani are considered to be the authorities in regard to framing dividend questions in their finance research. They, particularly focused on how dividend policy is considered a choice between financing with internal equity or financing with orthogonal equity. In their study, Miller and Modigliani offered proof that dividends do not matter in a world that is characterized by