Working Management and Dividend Policy Assignment

Working Management and Dividend Policy - Assignment Example The two most significant theories dealing with this subject, as explained by Brealey and Myers, are that of Miller and Modigliani (MM), and the traditionalist view. According to the theory proposed by MM, the capital structure of the firm has no relevance to determining the value of the firm. So, they opine that there is no difference in the value of stock between geared and ungeared firms. Gearing does not affect the value of a firm, whether positively or negatively. The payment of dividend also is not necessarily required to be done on a regular basis, since it does not have any effect on the value of the share price. MM have proved that capital structure can be irrelevant even when debt is risky. (Brealey and Myers 469) Thus, MM propose that financial leverage or gearing does not affect shareholders wealth. And secondly, that the rate of return on shares increases as the firm's debt-equity ratio increases (pp. 473). But, this increase is exactly offset by increased risk and hence, the required rate of return, which nullifies the increase in returns. A "traditionalist" view has emerged in response to MM's proposals regarding geared equity. The traditionalists believe that personal borrowing is more expensive, risky and inconvenient to investors, so they are willing to pay a premium for shares in moderately geared firms. Consequently, they believe that firms should borrow to "realise" this premium. (Brealey and Myers 782) According to this view, up to a certain point of gearing, the Weighted Average Cost of Capital (WACC) decreases, and after this point WACC increases. The point where WACC is minimum is the optimal point of gearing, where shareholders' wealth is maximised or price per share is highest. (McLaney 231) MM rejected this view and opined that WACC is impervious to level of gearing. Wacc and the value of a firm only depend on (1) the cash flows generated by the investments of the firm, and (2) their business risk. (pp 234) They see a world without taxes or bankruptcy costs. McLaney observed that a large proportion of firms do go for some level of capital gearing, while very high levels of gearing are very rare. Thus, managers do believe that gearing lowers WACC, but not at very high gearing levels. Empirical evidence shows that "firms with safe, tangible assets and plenty of taxable income have higher debt to equity ratios than an unprofitable business with intangible assets." (Warner 1976, and Altman 1984 qtd. in Soderlund and Ostermark) The pecking orders theory by Myers (1987) gives a conflicting view. It explains that some profitable firms borrow less as they have less requirement of outside money. Kjellman and Hansen (1993) have found that Finnish financial managers seek to maintain a constant debt to equity ratio. (qtd. in Soderlund and Ostermark) Soderlund and Ostermark have found that there are less dividend payouts when interest payments are high, since funds are channeled more towards creditors. There is a tradeoff between dividends and investments also. A tradeoff is also seen between dividends and net income. "When maximising net income, the model minimises dividends and prefers investments." (Soderlund and Oste

Socialization Research Paper Example | Topics and Well Written Essays - 1000 words

Socialization - Research Paper Example For others, there is just a willingness ‘to care for others’ (Calabrese 2004, p.21) without necessarily to focus on healing people. Emphasis should be given on the following fact: through the years, nurses tend to forget why they had become a nurse in the first instance (Calabrese 2004, p.21). It is assumed that the responsibilities of the particular role are many leading people to feel stressed and to feel less motivated towards nursing. Swansburg (1996) uses a different explanation for describing the willingness of people to become a nurse. According to Swansburg (1996) people are attracted to nursing just because of the challenges of the particular role (p.447). It is noted that through nursing people are given the chance ‘to realize their potentials’ (Swansburg 1996, p.447). It is implied that nursing is quite demanding, as a role, and requires people to put all their efforts in order to face the role’s daily challenges. At the same time, nursing offers people the opportunity ‘to show their creativity’ (Swansburg 1996, p.447). This is achieved by taking initiatives for facing emergent problems but also for managing cases that are quite complex and where there are no standardized solutions. In addition, nursing can be quite attractive to people that aim to communicate and cooperate with others (Swansburg 1996, p.447). A successful nurse needs to have high communication and cooperation skills, as the effective management of a case usually requires the use of plans that need to be supported by medical practitioners in different positions; for example, a patient who is severely traumatized due to an accident needs at the first level the support of the emergency medical staff, at least one medical practitioner and one nurse; at the next level, the patient will need a highly skilled surgeon supported by a team of appropriately trained nurses. When recovering, the patient will need the support of a nurse who will assis t the patient when developing the recovery program. Nurses have a critical role in arranging the above activities ensuring that all phases of a treatment plan are precisely followed so that the cases for failures are minimized (Swansburg 1996, p.447). From another point of view, Swansburg (1996) notes that people are likely to enter nursing only because they need to feel as members of a family (p.447). According to the above view, nursing can offer to people the sense of love and care, not only towards others but also towards themselves (Swansburg 1996, p.447). One of the most critical conditions for entering nursing seems to be the gender (Newell 2003, p.2). In fact, it seems that nursing is primarily a ‘female profession’ (Newell 2003, p.2), meaning that women are much more likely to be attracting to this profession compared to men. In any case, caring for others seems to be the key reason leading people to become a nurse (Newell 2003, p.4). The term caring in the abo ve case has many aspects. It can refer to the support provided to others in regard to a health problem (Newell 2003, p.4). Caring can also reflect the need of people ‘to connect with other human beings’ (Newell 2003, p.4). It should be also noted that caring, as a reason for entering nursing, has many implications. Taking risks in behalf of others is a critical aspect of caring in nursing (Newell 2003, p.4