Episode Details

We spent this session first talking about the shift towards buybacks in recent decades, and how that shift can be explained by the increased desire for flexibility among companies that face more uncertainty about future earnings. We then moved on to two measures of dividend policy - dividend payout and yield, before looking at three schools of thought on dividends that cover the spectrum (dividends don’t matter, dividends are bad, dividends are good)., We ended the class by looking at two bad reasons for paying dividends (that they are more certain, that you had a good year). As you wrap your head around buybacks and what they can and cannot do to companies, you may find the following post that I have on the topic useful (or not):
https://aswathdamodaran.blogspot.com/2023/03/data-update-7-for-2023-dividends.html

Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr23/session22slides.pdf
Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22test.pdf
Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session22soln.pdf

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