THE IMPACT OF DIVIDENDS

The significance of Dividend Policy As I was reading the news an article popped on my screen which gave me the topic of today’s blog. Honda Motor Co Ltd.’s shares had a 5.3% increase reaching their highest level since the beginning of January. This abrupt change came one day after the company’s announcement that it would buy back up to ¥90bn ($789m), thus increasing the yield for the shareholders. Moreover, companies such as Apple and Microsoft spend huge amount of their residual income on repurchasing shares and distributing dividends rather than reinvesting this pile of cash. The first one, has the title for the world’s biggest dividend payer, as it currently hands out as much as 13.22 billion dollars annually. When it comes for Microsoft, the lie on the third place of the list cited above allotting 12.02 billion to shareowners. Added to this, it has announced four buyback shares -40 billion dollars each – in the past few years, in an effort to boost its share price. ...

Investors are People in Arts As the module is slowly coming to a close random thoughts of what I have learned so far come to my mind. Finance is like a canvas and investors are painters. Whistleblowing, insider dealing, ethics, valuation models, market efficiency, capital structure are just some of the colors they use which all contribute each one in a unique way to create a perfect (?) balance that lies on thread waiting an event to change this balance in an unforeseen a way. On this blog we are going to discuss about such an event, the Brexit. It is stated that Britain will leave the EU by the end of March 2009. The value of the pound has dropped its value compared to other currencies, which had a negative effect to the imports. Consequently, inflation has been noted pushing the prices of basic goods to go up and economic growth to slow.   However, it has been beneficial to the exports and to the blue chip companies of the FTSE 100. In more detail, the fact that the...

Bitcoin: An ethical investment or not? As I was zapping on the TV a financial documentary popped in my screen about the biggest contemporary financial scandal; the Madoff Hustle. The documentary, narrated by Robert Vaughn, tracks the life of Willard Foxton whose father passed away after killing himself because of investing all his funds in Madoff’s scandal. In this blog we are going to scrutiny over the case of Bernard Madoff an investor advisor and former stock broker who managed to commit a fraud worth of 64.8 billion dollars and afterward we are going to discuss about a controversy that began last year surrounding the ethics of bitcoin. Madoff was the founder of the company “Bernard L. Madoff Investment Securities LLC”, whose main operation was to manage assets and securities in order to create wealth for its investors. His company had outstanding yields that outperformed all its opponents. Although all the firms in the Wall Street avoided to invest in Madoff’s firm, the...

Mergers and Acquisitions: A beneficial deal or one step towards collapsing? Mergers and Acquisitions (M&A) play a crucial role in the financial system. Although evidence oppose, as historic data have shown that returns tend to decrease after the merger, companies continue to engage to this kind of activity. In this blog, we are going to discuss about the reasons behind mergers and some issues that appear during the process. Afterwards, two examples will be given, one about a successful M&A and one that ended up as a disaster. In 2016 the M&A activity reached a value of 3.6 trillion dollars. The main wave of deals derived from China, which completed mergers with both American and European-based firms. These deals engaged despite the geopolitical events that stunned the whole planet; UK’s vote to leave the European Union and Trump’s election in the U.S. .Moreover analyst predicted that this year the M&A market will continue the same trend. But why are companie...

Iceland: Coming back from the dead As I was zapping a came across a film named ‘’The Margin Call’’. This movie, directed by J. C. Chandor, gave me the spark to write this week’s blog. This award-winning film takes place in the 21 st century and to be more specific a few weeks before the burst of the financial crisis of 2008.An investment bank is on the verge of ‘’pulling the plug’’. Simultaneously, a financial analyst, named Peter Sullivan (Zachary Quinto), discovers a fundamental lapse in the bank’s algorithms, which threats to tear down not only the company but the whole financial system. When the company’s executives realize the extent of the imminent hazard, they decide to take remedial action in order to find the formula to salvage the future economy. Nevertheless, the time is ticking out and the ethical dilemmas make it difficult to show diligence and prudence.   Will they manage to redress the problem? Or will the selfish incentives predominate once again? Well,...

To owe or not to owe? My parents always told me never to owe money to anyone. ’’To be bound to someone only leads to disaster’’ they said. But on what extent is that true- when talking about companies’ debt-? Well, on this blog the advantages and disadvantages of blogs will be presented. Furthermore, we will take a closer look on MacDonald’s balance sheet and argue whether debt brings should bring exuberance to their stakeholders. Capital structure defines both the yield for the shareholders and the chances for survival during recession. Capital structure is a combination of equity capital-money gathered from issuing shares- and debt capital-cash inflows from issuing bonds, or other liabilities. What is the correct balance thought? On one hand, having low cost of debt equals to reduced risk, greater ability to withstand emergencies such as volatility and recession, allowing greater manoeuvre in the market. On the other hand, it is argued that borrowing money for investm...

Greed; Giving Nothing For Something After last week’s initiation to the world of the bloggers I decided it was time to write my second one. Each week we are going to have a magic word. This week it’s all about corruption. We are going to discuss about one of the most prevalent economic bubbles in the modern history; Lehman Brothers’ collapse and the bubble that was pertained to it. Let’s get into action, shall we? The following info is based on the documentary ‘’the last days of Lehman Brothers’’ (2009) directed by Mr. Michael Samuels. The bankruptcy of the fourth biggest investment bank took place on the second weekend of September. Why on the weekend? Well, because the stock markets are closed then so no turmoil can be caused by speculation. After months of unprecedented loss-over 75% plan in the stock value- Lehman brothers had reached a crucial point. The bank, owning as much as 600,000,000,000$ worth of assets, was on the verge of the cliff because it was both under-co...

Ophelia storm is on the way: Time to sale some stocks? It was Monday night and as we were urged to stay home due to bad weather conditions, I decided to write a blog .I had the motive but not the topic though. After a while, I came across an article on the Financial Times called ‘’Financial models are no excuse for resting your brain ‘’ which triggered me to start writing. The article written by Mr. John Vay mainly discusses the fact that passive strategies are not as effective as they used to be .To be more precise, the use of historic data does not show the correlation of many assets and recommend investing in well established companies rather than small growth orientated ones. “Diversification is a matter of judgement not statistics”. But on what extent is that true? Should we rely on passive strategies and obsolete -as they call them- theories like Modern Portfolio Theory?   In order to seek for the answer have to look at some theory first… Active management refers ...