The Advantage of Using the Low-Regular-And-Extra Dividend Policy Is That

question 55

Multiple Choice

The advantage of using the low-regular-and-extra dividend policy is that

• A) the firm avoids giving the shareholders false hopes.
• B) if the firm's earnings drop, so does the dividend payment.
• C) the extra dividend may become a regular event.
• D) cyclical shifts in earnings may be avoided.

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Definitions:

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors.

Social Comparison Theory

The belief that a person's societal and personal value is self-assessed by measuring themselves against others whom they view as being on better or worse footing.

Festinger

A reference to Leon Festinger, a psychologist best known for Cognitive Dissonance Theory, which suggests that we have an inner drive to hold all our attitudes and beliefs in harmony and avoid disharmony.

Normative Social Processes

Social mechanisms that dictate acceptable behaviors and beliefs within a society, guiding individuals on how to act according to societal norms.