If Managers Commit Themselves to Paying Out Cash in Excess

question 36

Multiple Choice

If managers commit themselves to paying out cash in excess of investment needs as dividends rather than retaining it within the company,shareholders' wealth may increase because:

• A)it indicates that management will not waste resources.
• B)shareholders prefer dividends now rather than in the future.
• C)it reflects badly on future investments.
• D)it reflects positively on future investments.

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Definitions:

Chain Of Command

The hierarchical structure within an organization that delineates authority, responsibility, and communication pathways.

Grapevine

An informal communication channel within organizations where information, often unverified or speculative, spreads quickly among employees.

Rumors

Unverified information or stories spread informally, usually carrying uncertainty or ambiguity.

Richest Communication

The most effective and comprehensive form of communication, typically involving multiple channels such as verbal, nonverbal, and written methods.