Because of the tax laws of the 1960s and 1970s, when dividends were taxed more heavily than capital gains, shareholders preferred that corporations:
A) pay dividends annually.
B) keep free cash flows for investment in acquisitions.
C) distribute capital gains regularly.
D) increase managerial salaries.

Question

Quizplus · Accepted Answer

Shareholders preferred that corporations reinvest free cash flows into acquisitions or other investments to increase the value of the company, leading to capital gains, which were taxed at a lower rate than dividends.

Because of the Tax Laws of the 1960s and 1970s