Busıness Fınance Iı Deneme Sınavı Sorusu #999448
"If there is a larger than expected dividend increase, it signals to investors that managers anticipate bright future prospects of the company. On the contrary, if the dividend decreases or it is less than expected, it signals to investors that managers forecast poor future earnings."
Which of the following policies suggest this thesis?
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Dividend signaling hypothesis |
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Residual dividend policy |
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The dividend irrelevance theory |
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The signaling effect theory |
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The bird-in-the-hand theory |
Dividend signaling hypothesis, also called, dividend information content hypothesis stating that if there is a larger than expected dividend increase, it signals to investors that managers anticipate bright future prospects of the company. On the contrary, if the dividend decreases or it is less than expected, it signals to investors that managers forecast poor future earnings.
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