The dividend policy is a set of guidelines that a business uses to decide how much of its earnings it will pay out to its shareholders. The guidelines include whether to issue dividends and what amount. This is most influenced by a company’s long-term earning power.

In using corporate profits to buy up every firm he possibly could, Tyco’s CEO, Dennis Kozlowski, didn’t waste investor money in the sense that he invested it in worthless projects, but he did ultimately cost Tyco investors millions of dollars. In your initial post, consider the benefits and drawbacks of acquisitions. How does acquiring other companies hurt investors? How does acquiring other companies help investors?

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Benefits of Acquisitions 1 Synergies Acquiring companies can create synergies where the combined ent... View the full answer