Changing the amount paid for cash dividends implies which of the following:
A) the value of the company will increase/decrease.
B) the share price of the company will increase/decrease.
C) the company has had a fundamental change in their business.
D) all of the above.

Question

Quizplus · Accepted Answer

It is important to recognise that we cannot interpret these studies as proof that changes in dividend policies cause changes in share prices. Rather, the cash flow identity suggests that management change dividend polices when something fundamental has changed in the business.

Changing the Amount Paid for Cash Dividends Implies Which of the Following