Why do loss- making companies still pay a dividend?
A) Managers realise that reduced dividends will result in lower staff motivation.
B) The tax benefits exceed the loss incurred in paying the dividend.
C) Managers want to signal that the decline in earnings is permanent and shareholders should take their profits.
D) Managers want to signal that the decline in earnings is temporary and that positive earnings are expected in the future.
Correct Answer:
Verified
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