Session 24: Trust, Control and Dividend Policy

(I am sorry but I had a malfunctioning mike all session, and the sound quality reflects it.)

In this class, we started by using the dividend assessment process of looking at FCFE/cash return and then gauging trust in management, using the companies that we have used as lab experiments in the class (Vale in 2013, Tata Motors in 2013) and peer group analysis. In the process, we looked at why it is so difficult to get out of a dysfunctional dividend policy, as control trumps sanity and worries about the short term and peer group comparable delay action.We then started on valuation as the place where all of the pieces of corporate finance come together - the end game for your investment, financing and dividend decisions. We then looked at how these numbers can be different depending on whether you take an equity or firm perspective to valuation and what causes these numbers to change. Ultimately, though, the best way to learn valuation is by playing with the numbers and seeing how value changes. I also talked about how critical stories are to good valuations and if you are interested, I do have a YouTube video on the topic:
https://www.youtube.com/watch?v=uH-ffKIgb38

Slides: https://www.stern.nyu.edu/~adamodar/podcasts/cfspr22/session24slides.pdf
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24test.pdf
Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session24soln.pdf