problem 1:

The Directors of Dodo Plc are discussing the significance of the dividend policy on the market value of their firm.  The Chairman considers that the dividend is significant and does affect the company’s market value. On the other hand the Finance Director disagrees, saying that the dividend policy has no impact on company’s market value.

Required:

Prepare a report which fully describes both Directors’ views. Comprise appropriate empirical research to support both views.

problem 2:

Every time a listed company does a share buyback, investors and media alike would debate fiercely on the merits of such a scheme. There are investors who prefer buybacks to high dividends payments and vice versa. Proponents of both schemes position themselves to share price increases as their proof that such schemes increase shareholder value.

Required:

describe whether shareholders’ value is improved not by a change in financial structure or dividend policies but by more fundamental factor based on information asymmetry. Support your argument with empirical evidences.