Which of the following is a reason financial policy might matter?
A) Firms must pay corporate income taxes.
B) Capital structure choices can affect firm's real investment decisions, such as R&D and PP&E.
C) Information or transaction costs.
D) All of the above

Question

Quizplus · Accepted Answer

All three choices are valid reasons why financial policy might matter. 
A) Corporate income taxes are a direct cost that affects a firm's bottom line and financial decisions.
B) Capital structure choices, such as the use of debt versus equity financing, can impact a firm's ability to undertake projects and make strategic investments in areas such as research and development (R&D) and property, plant, and equipment (PP&E).
C) Information or transaction costs associated with financial decisions, such as the cost of obtaining financing or the cost of monitoring and reporting financial performance, can also impact a firm's financial policies and practices.

Which of the Following Is a Reason Financial Policy Might