CORPORATE FINANCE - CONNECT ACCESS
CORPORATE FINANCE - CONNECT ACCESS
12th Edition
ISBN: 9781264054893
Author: Ross
Publisher: MCG
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Chapter 19, Problem 3CQ

Dividend Policy It is sometimes suggested that firms should follow a “residual” dividend policy. With such a policy, the main idea is that a firm should focus on meeting its investment needs and maintaining its desired debt-equity ratio. Having done so, a firm pays out any leftover, or residual, income as dividends. What do you think would be the chief drawback to a residual dividend policy?

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