Comment briefly on each of the following statements:

a. “Unlike American firms, which are always being pressured by their shareholders to increase dividends, Japanese companies pay out a much smaller proportion of earnings and so enjoy a lower cost of capital.”

b. “Unlike new capital, which needs a stream of new dividends to service it, retained earnings have zero cost.”

c. “If a company repurchases stock instead of paying a dividend, the number of shares falls and earnings per share rise. Thus stock repurchase must always be preferred to paying dividends.”