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Assume That a Firm Has a Steady Record of Paying

question 139

Multiple Choice

Assume that a firm has a steady record of paying high dividends for years.A new management team decided to cut the current year's dividend in half without disclosing why.The market value of the stock fell 35% on the day the dividend cut was announced.Which of the following would best explain the stock market's reaction to the announcement?


Definitions:

McDonaldized

Referring to the process by which the principles of the fast-food industry, such as efficiency, predictability, and control, are coming to dominate more sectors of society and more organizations.

Predictability

The ability to accurately forecast future events or behaviors based on current or past patterns.

Standardization

The process of implementing and developing technical standards to optimize compatibility, safety, repeatability, or quality.

Theorists

Individuals who propose and develop conceptual frameworks and perspectives to explain various phenomena or aspects of the world.

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