What do managers believe about dividend policy

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Given the pros and cons for paying dividends, and the lack of a consensus on the effect of dividends on value, it is worth considering what managers factor in when they make dividend decisions. Baker, Farrely and Edelman (1985) surveyed managers on their views on dividend policy and reported the level of agreement with a series of statements. Table 10.3 summarizes their findings -

Table 10.3: Management Beliefs about Dividend Policy

Statement of Management Beliefs


No Opinion


1. A firm's dividend payout ratio




affects the price of the stock.

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