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Despite the theoretical assertions of proponents of the dividend irrelevance theory, many investors do care about dividends. The table lists some factors that might affect
Despite the theoretical assertions of proponents of the dividend irrelevance theory, many investors do care about dividends. The table lists some factors that might affect an investor^'s preference for dividends. Indicate whether each factor is likely to make an investor prefer to receive more or fewer dividends.Roxxon Inc. is a typical company that is very concerned with meeting investors^' expectations and keeping investors happy. Its earnings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Roxxon Inc.^'s dividend policy?Roxxon Inc. will increase its dividends in years when it has high earnings so that it can distribute excess free cash flows to investors, even if it means that the firm will have to reduce its dividend in subsequent years.Roxxon Inc. will be willing to increase its dividend only if it believes that it will be able to maintain the dividend increase in future years
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