Could you please explain whether the payment of dividends can mislead people to think that the company is in good financial health?© BrainMass Inc. brainmass.com October 10, 2019, 5:58 am ad1c9bdddf
The payment of dividends can easily lead investors or potential investors to believe that a company is profitable, which is oftentimes very misleading. When a company pays dividends, they do so from remaining profits. When there is a profit situation, the board of directors can declare a dividend. A company doesn't have to pay dividends, but most choose to ...
This solution explains if and why a company's declaration and subsequent payment of dividends can mislead people to think that the company is in good financial health. Response includes 1 reference.