Special dividend

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A special dividend (also special distribution ) is understood to be a one-time distribution ( dividend ) to the shareholders of a corporation .

The reason for special dividends is the existence of excess liquid funds or unused free debt capacities. In terms of the balance sheet, the special dividend requires the release of reserves or a capital reduction . The special dividend is i. d. Usually tax-free, as it is a repayment of reserves created from taxed profits or deposits made in the past.

criticism

Often the pressure of influential shareholders causes the distribution of special dividends, who see no sensible investment opportunity for the available funds. In individual cases, financial investors initiated new borrowing with the aim of distributing the borrowed funds directly in the form of a special dividend (also known as leveraged recap ). The special distribution has become the decisive financial market instrument with which the debt transfer from the buyer of a company to the company itself is processed. In individual cases, the burden of debt transferred has contributed significantly to the insolvency of traditional companies.

Effect on market price

In the case of listed companies, the payment results in an adjustment of the share price on the day of payment (ex-day) with a decrease in the price by the amount of the payment. In addition, special dividends usually have no lasting impact on the company's price.

See also