What are the possible reasons for the price change

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Question - Although we say that a firm's dividend policy does not matter in an ideal world without frictions (i.e. no taxes, no transaction/issuance costs, no information asymmetry), in practice, we often observe firms that announce a cut in dividends experience a decline in stock prices after the announcements. What are the possible reasons for the price change following these dividend cut announcements?

Reference no: EM132955030

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