A younger firm,with more growth opportunities,is less likely to pay dividends than an older company.

Question

Quizplus · Accepted Answer

Younger firms generally reinvest their earnings into growth opportunities instead of paying dividends to shareholders. As they mature and become more established, they may start paying dividends as they no longer require as much capital for expansion. On the other hand, older companies with stable earnings and cash flow are more likely to pay dividends to their shareholders.

A Younger Firm,with More Growth Opportunities,is Less Likely to Pay