Kizspy | Question: 27
(Choose 1 answer)
Which of the following explanations is usually NOT a possible benefit of dividends?
A. Some investors prefer dividend-paying stocks and will be willing to pay a higher price for stocks with
regular dividends.
B. Paying out large regular dividends can force management to regularly raise more capitals. The extra
scrutiny involved in raising capital can increase the incentives of management to run the company efficiently.
C. Dividends can be used to manage the capital structure of a company.
D. Paying dividends reduces the probability that a firm will enter financial distress.
