The main concern over the investor preference for dividends or reinvestment is centred on tax implications.

Question

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When investors prefer dividends over reinvestment, they receive taxable income. On the other hand, when investors opt for reinvestment, they do not receive taxable income until they sell the investment, which can result in capital gains tax. Therefore, tax implications are a major concern when it comes to this preference.

The Main Concern Over the Investor Preference for Dividends or Reinvestment