One possible reason that shareholders often insist on higher dividends is:
A) They agree with Miller and Modigliani
B) Tax consideration
C) The stock market is efficient
D) They do not trust managers to spend retained earnings wisely

Question

Quizplus · Accepted Answer

Shareholders may insist on higher dividends because they do not trust managers to spend retained earnings wisely. They may believe that the managers would invest in projects with lower returns or waste the company's funds, whereas giving out dividends allows them to have control over the cash and invest it elsewhere.

One Possible Reason That Shareholders Often Insist on Higher Dividends