Which of the following would not have an influence on the optimal dividend policy?
A) The possibility of accelerating or delaying investment projects.
B) A strong shareholders' preference for current income versus capital gains.
C) Bond indenture constraints.
D) The costs associated with selling new common stock.
E) All of the above can have an effect on dividend policy.

Question

Quizplus · Accepted Answer

All of the factors listed can potentially affect a company's optimal dividend policy. The possibility of accelerating or delaying investment projects can affect the cash flow available for dividends, shareholder preferences can impact the demand for dividends, bond indenture constraints may require a certain level of dividend payments, and the cost of selling new stock can affect the decision to issue dividends instead of raising capital through equity financing.

Which of the Following Would Not Have an Influence on the Optimal