Some researchers feel that stockholders prefer dividends to retained earnings because dividends have information content.

Name: Some researchers feel that stockholders prefer dividends to retained earnings because dividends have information content.
Brand: Quizplus
Rating: 4.9 (52 reviews)

Question

Quizplus · Accepted Answer

Stockholders may perceive dividends as a signal of a company's financial health and prospects, and may therefore value dividend payouts more than a company retaining its earnings. This concept is known as the dividend signaling hypothesis.

Some Researchers Feel That Stockholders Prefer Dividends to Retained Earnings