Which of the following is the most important factor motivating dividend policy for large American corporations?
A) Changes in EPS
B) Maintain constant dividend payout ratio
C) Avoiding flotation costs of selling new stock
D) Avoid reducing dividends per share

Question

Quizplus · Accepted Answer

Large American corporations primarily aim to avoid reducing their dividends per share as it is considered a negative signal to the market, which can lead to a decrease in stock price and a loss of shareholder confidence. Maintaining a consistent dividend policy conveys stability and reliability to investors, helping to attract and retain shareholders. Changes in EPS and avoiding flotation costs may also be factors in dividend policy decisions, but they are generally subordinate to the goal of preserving dividend payouts to shareholders.

Which of the Following Is the Most Important Factor Motivating