What are the arguments that may arise when discussing : should companies treat dividends as a residual payment to shareholders
Treating dividends as a residual payment is a passive dividend policy. The arguments against such a policy would be -
1. Dividends have information content, they provide signal to the market regarding the financial health of the company. Treating dividends as a residual would mean that dividends would change every year and investors would find it ...
The solution explains why dividends should not be treated as residual payment