Corporate Finance Essay Example | Topics and Well Written Essays - 3500 words

Corporate Finance - Essay Example e impact on stock prices.(Frankfurter 2002 )Another school of thought contends that prices are negatively correlated with dividend payout levels.(Frankfurter 2002).The third view is that firm dividend policy is irrelevant in stock price valuation. (Frankfurter 2002.These views are best summed up as being based upon, the tax effect ( Litzenberger and Ramaswamy (1980),)Clientele effects explanations (Elton and Gruber, 1970), Agency theory explanations(Easterbrook 1984), Signaling models(John and Williams (1985), and psychological/sociological explanations ( Frankfurter and Lane 1992). Coming to the aspect of Dividend Policies, Capital structure decisions and taxation academic literature has similarly differed and presented varying views. The leading theory here is the MM theory discussed below based on which the paper explores the literature pertaining to the simultaneous effect of both the corporation tax and personal income taxes on the dividend policy and capital structure of a firm in theory. In this vein many other studies have also examined the temporal pattern of corporate dividend payout and dynamic dividend behavior based on varying tax codes.(MA Lasfer 1996). It has been seen often that there will be â€Å" structural shifts in the aggregate dividend payout and these shifts often coincide with tax law changes†(Wu 1996).Thus the empirical evidence on the effects of both corporation and personal income taxes on dividend payment adjustments and on capital structure decisions is accordingly reviewed hereafter. It has often been stated that companies set their dividend policies to minimize their tax liability and to maximize the after-tax return of their shareholders. (Wu 1996).It has also been stated that whenever a company is unable to deduct the advanced corporate tax from their tax liability it will resort to giving out low dividends.(Wu 1996 citing Brennan). The notion of the tax hypothesis states that the differential taxation of dividends and

Rene Descarte's Faulty Reliance Essay Example | Topics and Well Written Essays - 1250 words

Rene Descarte's Faulty Reliance - Essay Example To rehearse his argument in short: Descartes believes that we cannot at first glance trust our senses, as it is possible that we are being deceived. Those elements of the world outside our own mind (the res extensa) are available for our thought and our perception (res cogitans) but we cannot trust that the reality of what we think we see is in fact what comprises the world around us. We should doubt, radically, such a belief, because for Descartes this gap between the world around us and our knowledge of the world helps to explain why there exists to many different beliefs about the fundamental nature of our existence. Instead, Descartes suggests, we should be satisfied with the knowledge only that we can think, that we can consider, that thing that we call knowledge, and that material we think of as the world. Hence the famous notion of the Cogito, which in somewhat condensed form, suggests that â€Å"I think, therefore I am.† The claim here is not that of a logical operatio n (thinking begets the awareness of existence) but rather that thinking constitutes the one demonstration of existence that our imperfect cognition makes allows. We are imperfect creatures, capable of being aware of our own imperfections. At the same time, though, we are aware of the possibility of perfection. We can think about the ideal, the infinite, the absolute. And yet we do not know these things, we do not experience these things, and we cannot point our fingers in the direction of some object out there in the physical world around us, in order to demonstrate any of these ideal qualities. Imagination, Descartes seems to suggest, simply isn't powerful to make an argument by way of extension, that would imagine perfection or completion from imperfect or incomplete elements. And so, Descartes suggests, our capacity to think – which is our only true capacity and essence – must have some root that explains the nature of perfection. Descartes introduces this argument by way of a rather awkward rhetorical question (93): â€Å"Now, it is manifest by the natural light that there must at least be as much reality in the efficient and total cause as in its effect; for whence can the effect draw its reality if not from its cause? And how could the cause communicate to it this reality unless it possessed it in itself? (93) How could it, indeed? Well, for Descartes, the answer to the question is contained within its premise: if we can understand perfection, there must exist the essence of perfection, and thus we know that God exists. From the act of thinking, then, we know that we exist, and from the act of thinking about the transcendent or the divine, then we know that God exists. These may seem like separate argument claims. Indeed, in the order they are presented, the Cogito appears to pave the way for the subsequent Ontological argument that proves the existence of God. But we need to understand that this is a trick of presentation, not a linear lo gical relationship. In fact it is the other way around, though this doesn't become apparent until Descartes concludes his project, when the debt the Cogito owes to the Ontological argument is revealed. The most telling paragraph is this: ...considering only that God is my creator, it is highly probably that he in some way fashioned me