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:

Non-Experimental

Research methods that do not involve manipulating variables to determine effects but instead observe naturally occurring relationships.

Experimental

Pertaining to a method of research that involves the manipulation of variables to establish cause and effect relationships.

Correlational

Relating to a statistical relationship between two or more variables, where changes in one variable are associated with changes in another, without implying causation.

Confounding Results

Outcomes in research that cannot be accurately attributed to the variables under examination because of the influence of extraneous variables.