Český finanční a účetní časopis 2008(3):20-26 | DOI: 10.18267/j.cfuc.277

Model of Deferred Advantage or Disadvantage from Reinvestment - Methodical Problems

Petr Marek
Prof. Ing. Petr Marek, CSc. - profesor; Katedra financí a oceňování podniku, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3, Česká republika; <pema@vse.cz>.

The article deals with methodical problems connected with model of deferred advantage (or disadvantage) from reinvestment. The advantage shall be understood as a difference in shareholder's wealth resulting from the situation when the corporate profits are ploughed back into business operations rather than distributed among shareholders in form of dividends. If negative figures are the case, it is dealt with deferred disadvantage. Main methodical problems represent a) form of shareholder's income (dividend payment versus capital gains), b) number of periods, c) fixed versus proportional return on capital, and d) tax aspects. On base of Masulis and Trueman paper (1988) optimal dividend payout ratio was also proposed.

Keywords: Dividend; Dividend policy; Model of deferred advantage or disadvantage from reinvestment.
JEL classification: G35

Published: October 1, 2008  Show citation

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Marek, P. (2008). Model of Deferred Advantage or Disadvantage from Reinvestment - Methodical Problems. Czech Financial and Accounting Journal, 2008(3), 20-26. doi: 10.18267/j.cfuc.277
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    References

    1. Lease, R. C. - John, K. - Kalay, A. - Loewenstein, U. - Sarig, O. H. (2000): Dividend Policy. Its Impact on Firm Value. Boston, Harvard Business School Press, 2000.
    2. Marek, P. (2000): Rozdělování hospodářského výsledku a dividendová politika. Praha, Ekopress, 2000.
    3. Masulis, R. W. - Trueman, B. (1988): Corporate Investment and Dividend Decisions under Differential Personal Taxation. Journal of Financial and Quantitative Analysis, 1988, roč. 23, č. 4, s. 369-385.. Go to original source...

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