Gainesboro Machine Tools Corporation Harvard Case Solution & Analysis

In mid-September 2005 Ashley Swanson, chief financial officer of this large CAD / CAM (Computer Aided Design and manufacturing) equipment manufacturer must take a decision on the payment of dividends to shareholders of the company, or redemption of shares. If Swenson wants to pay a dividend, it must also decide on the payments. Subsidiary question is whether the firm should embark on a campaign of corporate image advertising, and change its corporate name to reflect its new outlook. The case serves as a consolidated review of many of the practical aspects of dividends and share repurchases solutions, including (1) signaling effects, (2) the effects of customers, and (3) finance and investment implications of increasing dividend payments and share repurchases solutions. This case may follow treatment Miller Modigliani dividend irrelevance theorem and serves to highlight the practical considerations in determining the dividend policy. "Hide
by Robert F. Bruner and Sean Carr Source: Darden School of Business 16 pages. Publication Date: December 6, 2005. Prod. #: UV1383-PDF-ENG

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