Mounting debts, less dividend payouts? The more loans companies have, the more dividends they pay

It has been a long-held principle in corporate finance that a company’s dividend payments must come from its net profits. Also, that the dividends paid to a company’s shareholders, whether holders of common or preferred stock, are entitled to some of those net profits in the form of dividends as a reward for investing and the risk involved. These concepts have been used in countless textbooks dealing with finance, accounting, and investments and has served as a basis for investors to purchase common or preferred stock throughout the decades. A company’s performance is often measured by how much dividends have increased over the years and whether it is a good long-term investment for individual investors, pension funds, mutual funds, and hedge funds. However, in recent years, the trend is changing in that corporations issuing common or preferred stock are paying dividends, not based on the amount of net profits they have made but based on the amount of financial capital that can be borrowed. A corporation may not necessarily make shareholders aware of this tactic as long as it adheres to its long-stated dividend policy and that they are receiving regular dividend payments whether they are increasing over time or remaining the same. The corporation could, in theory, maintain this method of paying dividends as long as the shareholders are satisfied and content with their cashflow from their equity investment in the company. But, in the long run, the corporation may actually be misleading shareholders as well as damaging the company’s financial situation by overextending itself with too much debt.

Corporate disclosure in a voluntary reporting environment: NYSE-listed firms in 1900

This paper examines the financial reporting done by firms listed on the New York Stock Exchange in 1900 and the firm characteristics that determined what and how much firms would disclose. At this time, there were no federal disclosure mandates or stringent requirements imposed by the Exchange. Therefore, the reporting done by firms was largely voluntary and resulted in significant variation across companies and industries. I look at all 191 firms that listed stocks on the NYSE in this year and use data from Moody’s Manual of Industrial and Miscellaneous Securities and Poor’s Manual of the Railroads of the United States to determine the amount of financial disclosure. I find that more capital-intensive firms were more likely to report income statements and balance sheets and provided more volume of information. In addition, food, mining, and miscellaneous service firms disclosed the least. In addition, all else equal, the age of a company and offering preferred stock did not significantly increase its likelihood of reporting financial statements. Overall, the results indicate that even absent regulation, firms would voluntarily provide information but at varying degrees based on how much the company relies on outside investors and whether its industry is competitive. They also suggest that managers considered potential or explicit investor demand for financial information and responded to this demand.

Analysis and classification of companies on Tehran Stock Exchange with Incomplete Information

Due to uncertainty and large number of companies in financial market, it has become difficult to choose the right stock to investments. Identifying and classifying stocks using fundamental criteria help investors to better understand the risks involved in selecting companies and better manage their own capital, thereby rapidly and accurately choose their preferred stock and make more secure profit. The main concern that capital market investors are facing difficulty to choosing the right stock despite the uncertainties in the market. Uncertainties in the market that lead to incomplete information are presented in this article to complete the reciprocal preference relation method. The purpose of this paper is to present a method for completing information to reduce the uncertainties in the market and finally classify companies in each industry based on fundamental criteria. The classification method used is acceptability / reject ability which is based on distance fuzzy analysis yields more accurate results. Finally, a case study on one of the most critical industries in Tehran Stock Exchange is presented to show the effectiveness of the proposed approach.

Stock Market Prediction

The Stock Market is a challenging forum for investment and requires immense brainstorming before one shall put their hard earned money to work. This project aims at processing large volumes of data and running comprehensive regression algorithms on the dataset; that will predict the future value of a stock using the regression model with the highest accuracy. The purpose of this paper is to analyze the shortcomings of the current system and building a time-series model that would mitigate most of them by implementing more efficient algorithms. Using this model, anyone can monitor the preferred stock that they want to invest in; and maximize profit by purchasing volume at the lowest price and liquidating the stock when it’s at its highest.

Impact of Contractual Rights on Preferred Stock Valuations in Delaware

The rights and the value of preferred stock have been the subject of several Delaware court decisions. These decisions are particularly significant for understanding the importance of contractual rights as the defining attribute affecting the valuation of preferred stock. Directors' fiduciary duties are primarily to common shareholders, while obligations to preferred shareholders are primarily contractual. Preferred stocks' contractual rights, as interpreted in these decisions, directly affects the value of the preferred and the common. When common shareholders control the board, the impact on the preferred can be negative. The common may be adversely impacted when preferred shareholders, particularly venture capitalists, control the board. Some commentators have argued that, when going-concern value is less than the preferred's preference, common stockholders should be entitled to the option value of their shares.