Dividend policy of the enterprise and the conditions of existence of modern joint-stock companies
Payments to shareholders
The conditions of existence of various enterprises, firms and companies in moderneconomic system are quite complex. Today it is difficult to even imagine any more or less significant corporation that would not increase its capital by selling its own shares. After all, even the largest and most profitable companies, such as Google, General Motors or the same Gazprom, are joint-stock companies. This is due, of course, to the fact that the reality of free market relations requires from enterprises a more flexible, prudent and generous financial policy, which would contribute not only to the development of joint-stock companies themselves, but also to the welfare of ordinary investors. Dividend policy of the enterprise,in turn, determines the future direction of the company's capital development, its current debt, investment opportunities and many other factors that are not significant for the joint-stock company. It is both an internal indicator of the stability and accuracy of the decision taken by shareholders, and an external motivator for potential investors. Thus, the company's dividend policy is a whole mechanism that allows an enterprise to have large capital, significant financial resources and high own cost in the market.
Dividends are a part of the company's profits that are payable to its shareholders. The amount of dividends depends on the decision taken by the shareholders' meeting. They can be paid several times a year, and never, which, in turn, determines the dividend policy of the enterprise. The market situation, current profit and other factors should be analyzed before making a decision on payment. Dividend policy each joint-stock company is a complex mechanism, the management of which does not adhere to any single indicator (for example, profit), since such an approach may be unpromising for further fundraising.
The impact of dividend policy
Timely and generous payment of the promise to shareholders is a pledge of a stable image among investors, attracting more and more of them and increasing the company's capitalization. However, this dividend policy of the enterpriseis very costly, forms debts and often unjustified financial burden. In turn, infrequent and mean payments lead to a decrease in the value of the company's shares, reduce its investment attractiveness. Competently formed dividend policy of the enterprise provides the joint stock company with an optimal payment program that does not lead to negative extremes. It is achieved using various methods of mathematical analysis, forming a system of dependent indicators of a stable investment attractiveness of an enterprise and a reasonable financial burden on it. At the same time, the shareholders' meeting is offered several optimal options for the company's dividend behavior depending on the aggressiveness of its stock operations, the investment state of the state of which the enterprise resides, and some other factors.