Why do firms choose to cut or eliminate their dividends? What usually happens to the stock price of a company that does this?© BrainMass Inc. brainmass.com March 22, 2019, 2:32 am ad1c9bdddf
Based on my several years history of investing in stocks, I have noticed that whenever companies have extra cash that they don't plan on using to finance their expansion, they usually distribute this extra cash to shareholders. This distribution can be through an extra, special dividend or stock repurchase.
How does the method the company chooses to distribute cash to stockholders affect its prices?