It was suggested that if a firm announces its intention to increase its dividends (paid from cash), the price of common stock increases, presumably because the higher dividend payout represents an unambiguous signal to shareholders that anticipated cash flows from investment are permanently higher ...

If the firm pays a cash dividend the market value of the firm goes down ceteris paribus and the risk ...

It was suggested that if a firm announces its intention to increase its dividends (paid from cash),

Question:

It was suggested that if a firm announces its intention to increase its dividends (paid from cash), the price of increases, presumably because the higher payout represents an unambiguous signal to shareholders that anticipated cash flows from investment are permanently higher. A higher level of cash flows is also beneficial to bondholders because it diminishes the probability of default. If dividends are paid from cash, what does the OPM suggest will happen to the market value of debt?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...