Question: During the late 1960s the top marginal personal income tax
During the late 1960s, the top marginal personal income tax rate on dividends, received by British investors, reached 98 percent, yet dividend pay-outs actually increased. How can you justify this empirical fact?
Answer to relevant QuestionsIn what way can managers use dividends to con-vey pertinent information about their firms in a world of informational asymmetry? Why would a manager choose to convey information via a dividend policy? Does empirical evidence ...Why should we expect a firm’s stock price to decline by approximately the amount of the dividend payment on the ex-dividend date? Why do U. S. stock prices generally fall by less than the amount of the dividend payment? Compare and contrast the constant payout ratio dividend policy and the constant nominal dividend payment policy. Which policy do most public companies actually follow? Why? Suppose that a firm follows the matching strategy. Does this imply that the firm’s current assets will equal its current liabilities? Why do we include only the variable cost of sales when estimating the average investment in accounts receivable? Why do we apply an opportunity cost to this investment to estimate its cost?
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