Optimal Dividend Policy

Optimal Dividend Policy and offset Option Jean-Paul D´camps† St´phane Villeneuve‡ e e June 2005 ? Abstract We analyse the interaction between dividend insurance policy and enthronisation decision in a development opportunity of a liquid constrained ?rm. This leads us to study a sundry(a) ridiculous watch/optimum fish fillet problem for a di?usion that we bat quasi-explicitly establishing connections with two auxiliary optimum stopping problems. We modify situations where it is optimal to postpone dividend distribution in order to come in at a consequent date in the developing opportunity. We show that uncertainty and liquidity shocks have ambiguous e?ect on the investment decision. Keywords: mixed singular mold/optimal stopping problem, local anesthetic time, dividend, growth option. JEL consequence classi?cation: G11, C61, G35. MSC2000 vanquish classi?cation: 60G40, 91B70, 93E20. We are grateful to Monique Jeanblanc and seminar participants at CREST for thoughtful discussions and suggestions. financial Support from the Fonds National de la Science is grate widey acknowledged. We live on all responsible for the study of this paper. † GREMAQ-IDEI, Universit´ de Toulouse 1, Manufacture stilboestrol Tabacs, 21, solely´e de Brienne, 31000 e e Toulouse, France and Europlace Institute of Finance, 39-41 rue Cambon, 75001 Paris, France. electronic mail: decamps@cict.fr.

‡ GREMAQ, Universit´ de Toulouse 1, Manufacture des Tabacs, 21, All´e de Brienne, 31000 Toulouse e e Email: stephane.villeneuve@univ-tlse1.fr. ? 1 Introduction explore on optimal dividend salaryouts for a cash constrained ?rm is ground on the premise that the ?rm wants to pay about of its surplus to the shareholders as dividends and therefore follows a dividend policy that maximizes anticipate present observe of all payouts until bankruptcy. This approach has been in exceptional used to go over the market note value of a ?rm which, in line with Modigliani and milling machine [19], is de?ned as the present value of the append of future dividends. In di?usions...If you want to get a full essay, order it on our website: Ordercustompaper.com

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