求偿顺序

问题如下：

John Ladan is an analyst in the research department of an international securities firm. Ladan is currently analyzing Yeta Products, a publicly traded global consumer goods company located in the United States. Selected data for Yeta are presented in Exhibit 1.

Exhibit 1.₤Selected Financial Data for Yeta Products

Yeta currently does not pay a dividend, and the company operates with a target capital structure of 40% debt and 60% equity. However, on a recent conference call, Yeta’s management indicated that they are considering four payout proposals:

Proposal #1: Issue a 10% stock dividend.

Proposal #2: Repurchase $40 million in shares using idle cash.

Proposal #3: Repurchase $40 million in shares by borrowing $40 million at an after-tax cost of borrowing of 8.50%.

Proposal #4: Initiate a regular cash dividend based on a residual dividend policy.

Based on Yeta’s target capital structure, Proposal #4 will most likely:

选项：

increase the default risk of Yeta’s debt.

increase the agency conflict between Yeta’s shareholders and managers.

decrease the agency conflict between Yeta’s shareholders and bondholders.

解释：

A is correct. Yeta is financed by both debt and equity; therefore, paying dividends can increase the agency conflict between shareholders and bondholders. The payment of dividends reduces the cash cushion available for the disbursement of fixed required payments to bondholders. All else equal, dividends increase the default risk of debt.

B is incorrect because the agency conflict between shareholders and managers would decrease (not increase) with the payment of dividends. Paying out free cash flow to equity in dividends would constrain managers in their ability to overinvest by taking on negative net present value (NPV) projects.

C is incorrect because paying dividends can increase (not decrease) the agency conflict between shareholders and bondholders. The payment of dividends would reduce the cash cushion available to Yeta for the disbursement of fixed required payments to bondholders. The payment of dividends transfers wealth from bondholders to shareholders and increases the default risk of debt.