Various management actions provide investors with clues as to the future prospects for the firm. Which of the following actions by management contains the most important economic information for common stock investors?

Question

Quizplus · Accepted Answer

An increase in cash dividends per share is the most important economic information for common stock investors because it indicates that the company has enough cash flow to distribute to its shareholders. This can be interpreted as a positive signal about the financial health and future prospects of the firm. A stock dividend or stock split, on the other hand, may or may not have a significant impact on the value of the shares, depending on the specific circumstances and market conditions.

Various Management Actions Provide Investors with Clues as to the Future