Discuss these hypotheses related to dividend policy

Reference no: EM132179475

Corporate Finance Assignment -

Required - This assignment requires the completion of the following tasks:

(a) Market reacts positively to dividend increases and negatively dividend decreases. Three explanations are provided for this notion.

i. Information content (signalling) hypothesis,

ii. Free cash flow hypothesis

iii. Clientele effect

Discuss these hypotheses related to dividend policy.

(b) Briefly discuss five reasons for companies to choose repurchases rather dividends under a classical tax system.

Reference no: EM132179475

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