Question:

management best signal the market that a firm is doing well?

• A. Distribute a liquidating dividend
• B. Issue additional shares of stock
• C. Increase the regular dividend amount
• D. Issue stock to pay the regular dividend
• E. Replace the regular dividend with a stock dividend

Information content of a regular dividend increase generally signals that

• A. management believes the future earnings of the firm will be strong.
• B. the firm has recently sold a subsidiary.
• C. the firm has a one-time surplus of cash.
• D. the firm has more cash than it needs due to declining sales.
• E. future dividends will be lower.