Question

How do growth opportunities affect dividend decisions ?​​

Answer 1

Explanation:

Companies having good growth opportunities retain more money out of their earnings so as to finance their required investments and pay less dividend and vice-versa.

Answer 2

Answer:

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• ☘Dividend decisions, as the very name suggests, refers to the decision-making mechanism of the management to declare dividends. It is crucial for the top management to determine the portion of earnings distributable as the dividend at the end of every reporting period. A company’s ultimate objective is the maximization of shareholders wealth. It must, therefore, be very vigilant about its profit-sharing policies to retain the faith of the shareholders. Dividend payout policies derive enormous importance by virtue of being a bridge between the company and shareholders for profit-sharing. Without an organized dividend policy, it would be difficult for the investors to judge the intentions of the management.