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As we know corporate structure in any publicly traded firm is important aspect for firms financial growth. Therefore, what should firm do with the extra

As we know corporate structure in any publicly traded firm is important aspect for firms financial growth. Therefore, what should firm do with the extra earning per share?

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  • should pay it out to shareholders unless the firm can earn a higher rate of return on the cash than the shareholders can earn by investing in the capital market.

  • should always reinvest it in new equipment.

  • should pay it out to management unless the firm can earn a higher rate of return on the cash than the management can earn by investing in the capital market.

  • should invest it in the safest projects available.

  • Should always invest it in U.S. equities.

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