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Dividend in the Context of the Share Valorization Policy

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  • Mihai BOTEZATU

    (The Bucharest Academy of Economic Studies, Romania)

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    Abstract

    As known, the meeting between the capital demand and offer takes place in an organized framework, on the capital market. There, we shall meet the title issuers and also the investors, which, as capital owners, intend to use their available capitals in a very efficient manner. If we refer at shares, these appear in form of negotiable instruments which mediate, in a very specific manner, the meeting between the reminded capital demand and offer. Therefore, through share issues, the capital users have the possibility to mobilize supplementary capitals, necessary to develop the respective business, which brings profit. In order for this thing to happen, the respective shares must sell. On the other side, for the respective shares to sell, somebody must need them; these are the investors who want to buy such titles for their available capital. When an investor takes into account such a variant of placing capital in shares, something which motivates him must exist. In this case, obviously the main motivation is the gain obtained after the respective capital placement. In such a context, one of the forms of the fain obtained after a capital placement in shares made by investors in such titles is dividend. The more the dividends afferent to its shares is, the higher the degree of attractiveness for the shares. As regards this fact, we must mention that sometimes, in certain years, such as the years of economic crisis, for example the profits earned by the issuing company may be smaller or even inexistent; consequently, obviously, the dividends will be smaller or even inexistent. Such a state of things would have negative effects on the capital market, the prices of the respective shares decreasing, which would also lead to the degree of the degree of attractiveness for the respective shares. Continuing this idea, it is easy to understand that, if the user of capitals, as share issuer, proceeded to a new share issue in order to mobilize some supplementary capitals, it would be difficult to evaluate his success. More exactly, it would be difficult to evaluate how fast the respective shares would sell, subsequent to which the issuer could mobilize new capitals, which could be found in the equity capital of the issuing company. This is a very good reason for the issuer of such titles is preoccupied by the fact that the products issued by him, such as the respective shares, to have such a degree of attractiveness which, finally, would lead to reaching the proposed purpose, meaning that the issued shares would sell, subsequent to this sale, the desired capitals would be mobilized. On this plan, one of the possibilities that the issuer has in order to reach his purpose mentioned above is to start to valorize such shares, using an adequate dividend policy.

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    Bibliographic Info

    Article provided by Faculty of Management, Academy of Economic Studies, Bucharest, Romania in its journal REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT.

    Volume (Year): 12 (2011)
    Issue (Month): 6 (December)
    Pages: 111-113

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    Handle: RePEc:rom:rmcimn:v:12:y:2011:i:6:p:111-113

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    Related research

    Keywords: dividend; share policy; capital; demand; offer.;

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