When the firm has a high retention ratio, thus paying low dividends, the dividend is a by-product of what kind of decision?

Question

Quizplus · Accepted Answer

The dividend is a by-product of the capital budgeting decision when a firm has a high retention ratio and pays low dividends. This is because the firm is choosing to reinvest its earnings into new projects or expansion opportunities rather than distributing them to shareholders, indicating that capital budgeting decisions are prioritized over dividend payments.

When the Firm Has a High Retention Ratio, Thus Paying