Chapter 15, Problem 2MC

b)

1)

Summary Introduction

Case summary:

Company I is founded to manufacture miniature micro wave frequency receivers and transmitters used in mobile internet and other communication applications. It is relatively less expensive and required less capital to manufacture these products. For this purpose, founders of company didn’t go for an IPO (initial public offerings).

Due to heavy demand situated for these products in the market, they must now access the outside equity capital to fund its growth. So before talking on outside investors, they must decide on a following aspects relating to dividend and distribution policies and other factors.

To discuss: Effects on distribution policy reliable with signalling hypothesis.

2)

Summary Introduction

To discuss: Effects on distribution policy reliable with the clientele effect.