In Order to Avoid Double Taxation and to Escape the Frequently

question 68

True/False

In order to avoid double taxation and to escape the frequently higher tax rate applied to capital gains,stockholders generally prefer to have corporations pay dividends rather than to retain their earnings and reinvest the money in the business.Thus,earnings should be retained only if the firm needs capital very badly and would have difficulty raising it from external sources.

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Definitions:

Negotiators Accountable

The responsibility of negotiators to justify their actions and decisions to those they represent or to a higher authority.

Communicating Through Intermediaries

The process of conveying messages or information through a third party rather than directly between the principal parties.

Formal Hierarchy

A structured organizational system where positions and roles are ranked according to levels of authority and responsibility.

Informal Communications

Communication that occurs outside the formal, official communication channels of an organization, often casually and without strict protocols.