The observation that cash-rich firms often use the funds to diversify rather than increase dividends indicates that:
A)Diversification is too costly for individuals
B)Growth is often valued for the sake of growth alone
C)Diversification is synergistic
D)Dividend-pricing models are of questionable value

Question

Quizplus · Accepted Answer

Firms may pursue growth through diversification for reasons other than financial synergy, such as managerial incentives or perceived strategic benefits, even if it doesn't maximize shareholder value.

The Observation That Cash-Rich Firms Often Use the Funds to Diversify