The ability of shareholders to undo the dividend policy of the ﬁrm and create an alternative dividend payment policy via reinvesting dividends or selling shares is called (a):

Question

Quizplus · Accepted Answer

The concept of shareholders being able to create their own dividend payment policy by reinvesting dividends or selling shares is called homemade dividend policy. It is a way for shareholders to customize their own cash flow needs and is a way in which they can effectively undo the dividend policy of the firm. The other options listed are not relevant to this concept.

The Ability of Shareholders to Undo the Dividend Policy of the ﬁRm