Which of the following is an important factor that affects dividend policies of companies around the world?

Question

Quizplus · Accepted Answer

Tax structures are an important factor that affects dividend policies of companies around the world. Companies consider the tax implications of dividends on both the company and its shareholders when deciding on dividend policies. Different countries have different tax policies affecting dividends, and these policies can either encourage or discourage companies from paying dividends. For example, if dividend income is taxed at a higher rate than capital gains, companies may choose to retain earnings rather than pay dividends.

Which of the Following Is an Important Factor That Affects