Which statement is correct?
A)Cash dividends and stock repurchases are treated equally for tax purposes.
B)In total dollars, cash dividends outweighed stock repurchases for the period 2003-2013.
C)Many firms either ceased paying or decreased their dividends per share in response to the 2003 change in dividend taxation.
D)Firms tend to prefer cash dividends over share repurchases for their flexibility and tax benefits.
E)A non-dividend-paying firm is more apt to do a stock repurchase than to commence paying dividends.

Question

Quizplus · Accepted Answer

Non-dividend-paying firms are more likely to repurchase stock rather than start paying dividends, as repurchases offer more flexibility and can be more tax-efficient for shareholders.

Which Statement Is Correct