Asked by Mariam Jaser on Apr 26, 2024

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Avoiding dividend cuts is consistent with both a residual and a compromise dividend policy.

Dividend Cuts

Dividend cuts occur when a company reduces the size of the dividend payments to its shareholders, often as a response to financial difficulties or the need to conserve cash.

Compromise Policy

A strategy of finding a middle ground between differing views or objectives in a negotiation or decision-making process.

  • Comprehend the determinants that affect decisions regarding dividend policy.
  • Comprehend the idea and consequences of a compromise dividend policy.
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Norma BejaranoApr 27, 2024
Final Answer :
False
Explanation :
A residual dividend policy focuses on investing in positive NPV projects first and paying out any leftover earnings as dividends, which could lead to fluctuating dividends. A compromise dividend policy aims to balance the goals of a residual policy with the desire to provide stable dividends, but avoiding dividend cuts is not a primary concern of a residual policy.