A STUDY OF DIVIDEND POLICY, NEW SHARES AND SHARE REPURCHASE.

M-M理论(Modigliani Franco和Merton MilIer，1958)说，投资与融资方式无关。实际上，如果没有税收或没有破产，并且公司税率等于个人边际税率(股息税和资本利得税税率为零)，但如果税收和破产都存在，公司的价值并不独立于其财务结构，公司的投资和财务决策是相互关联的。基于税收的模型假设公司决定投资和财务政策，以使其股价最大化，同时允许许多税率菜单。该模型的主要结果可以概括为：如果企业的税后利润相对于投资水平较小，企业通过留存和负债来为投资融资；如果相对于投资水平较大，则通过新股和债务为额外的投资项目融资。在中间情形中，额外的资金完全来自债务。然而，该模型不能解释公司支付股息的事实，尽管存在明显的税收劣势。它也没有解释同时支付股息和发行新股的常见做法，因为一家公司可能会同等数额地减少股息和新股发行，从而在不改变净分配的情况下减少纳税负担。公司为什么要支付股息？这是下一个被证明是经济学中最令人困扰的问题之一。包括基于税收的模型在内的许多理论被提出，但都没有得到普遍接受。在这个项目中，我的目标是为股息之谜和财务等级提供另一种解释，基于一个简单的模型，在这个模型中，公司试图通过向股东分配现金来表明盈利能力。

M-M theory (Modigliani Franco and Merton MilIer, 1958) says that investment is independent of how it is financed.Indeed , this is true if there are no taxes or if there are no bankruptcies and the corporate tax rate is equal to the individual marginal tax rate (with the dividend tax and the capital gains tax rates being zero) But if both taxes and bankruptcies are present the value of the firm is not independent of its financial structure and the firm's investment and financial decisions are interrelated.A tax-based model assumes that the firm determines investment and financial policies so as to maximize its share price while allowing many menus of tax rates. The main results of this model can be summarized as follows.If the firm's after tax profits are small relative to the level of investment, the firm finances investment by retention and debt.If they are large relative to the level of investment, additional investment projects are financed with new shares and debt. In the intermediate case, additional finance comes entirely through debt.However this model doesn't explain the fact that firms pay dividends, despite obvious tax disadvantages. Nor does it explain the common practice of paying dividends and issuing new equity simultaneously, since a company could presumably reduce dividends and new equity issues by equal amounts, thereby reducing tax liabilities without altering net distributions.Why do companies pay dividends ?This is next question that has proven to be one of the most vexing puzzles in economics.Many theories including the tax-based model have been proposed, but none has earned general acceptance. In this project, I aim to offer another explanation of the dividend puzzle and financial hierarchy, based upon a simple model in which firms attempt to signal profitability by distributing cash to shareholders.