What would best explain the reluctance of General Motors to eliminate its dividend in 2008,only a few months before its financial collapse and eventual government takeover?
A)clientele effect
B)leftist theory
C)unwillingness to initiate a share repurchase program
D)expectations of tax law changes

Question

Quizplus · Accepted Answer

The clientele effect suggests that once a company starts paying dividends, investors come to expect them and often rely on them for income. General Motors may have been reluctant to eliminate its dividend in 2008 because of fears that shareholders would react negatively to the loss of expected income, potentially leading to a drop in share prices or even a shareholder revolt.

What Would Best Explain the Reluctance of General Motors to Eliminate