Over the past ten years, Kingston Ltd has paid a dividend of 8% annually. For the year ended December 2014, the company did not propose any dividend. For the most part investors in the company consist of pension funds, retired senior citizens, and charities. Some shareholders have become restive and have raised their concerns to the directors of the company at the annual general about the change in the dividend. 

Which theory of dividend policy should the directors consider when evaluating their change in dividend policy? Explain this theory

Answer rating: 100% (QA)

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