In 1996, Kodak paid a cash dividend of $1.60 per share. At year-end 1996, Kodak shares were

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In 1996, Kodak paid a cash dividend of $1.60 per share. At year-end 1996, Kodak shares were trading at about $80 per share. Between 1997 and 2001, Kodak paid $1.76, and in 2002 raised its dividend to $1.80. Yet, despite the stable dividend payout, the price of Kodak stock steadily fell, reaching $27 in 2003. At that time, the firm announced its intention to reduce its dividend to about $0.50 per share, in order to invest $3 billion in digital technology purchases. Investors reacted to the announcement by bidding down Kodak shares by 14 percent. On October 21, 2003, The Wall Street Journal reported that some of Kodak's larger shareholders attempted to persuade Kodak executives to abandon their plan.
Discuss this issue in the context of the chapter text.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Principles of Accounting

ISBN: 978-0618736614

10th edition

Authors: Belverd Needles, Marian Powers, Susan Crosson

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