Why do managers tend to retain free cash flow?
A) Managers are in the best position to decide the best use of those funds.
B) These funds are needed for undertaking profitable projects and the issue costs are less than new issues of stocks or bonds.
C) Managers may not be acting in the shareholders best interest, and for a variety of reasons, want to use the free cash flow.
D) None of the above
Correct Answer:
Verified
Q23: The agency problem tends
A)to be more serious
Q24: Suppose in order to defraud the shareholders,
Q24: In high-growth industries where companies' internally generated
Q25: Outside the United States and the United
Q26: Tobin's Q is
A)the ratio of the market
Q27: In the graph at right, X, Y,
Q29: Self-interested managers may be tempted to
A)indulge in
Q30: A complete contract between shareholders and managers
A)would
Q30: The investors supply funds to the company
Q32: Why is it rational to make shareholders
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