B. State whether each of the following statements is true or false, and briefly explain why. (i) In perfect capital markets, payout policy is irrelevant. (ii) There are certain types of investors who prefer share repurchases over cash dividends. (iii) Empirical evidence shows that despite higher tax rates on dividends than on capital gains, the number of firms paying cash dividends is higher than the number of firms conducting share repurchases. (iv) Investors generally prefer the imputation tax system over the classical tax system. (v) Firms are generally reluctant to cut cash dividends.

B. State whether each of the following statements is true or false, and briefly explain why. (i) In perfect capital markets, payout policy is irrelevant. (ii) There are certain types of investors who prefer share repurchases over cash dividends. (iii) Empirical evidence shows that despite higher tax rates on dividends than on capital gains, the number of firms paying cash dividends is higher than the number of firms conducting share repurchases. (iv) Investors generally prefer the imputation tax system over the classical tax system. (v) Firms are generally reluctant to cut cash dividends.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 4Q: One position expressed in the financial literature is that firms set their dividends as a residual...

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