Control Homework Help

Control

Dividend policy may also be strongly influenced by the shareholders or the management’s control objectives. That is to say, sometimes management employs dividend policy as an effective instrument to maintain its position of command and control. The management, in order to retain control of the company in its own hands, may be reluctant to pay substantial dividends and would funds to finance profitable investment opportunities when an outside group is seeking to not control of the firm. Added to this, if a controlling group of shareholders other wish to purchase new shares of equity, under such circumstances, by the issue of finance investment opportunities, management may lose its existing control the converse, agreement is securely in control, either through substantial holdings or because shares are widely held, and the firm has a good image, it can afford to have a high dividend payout ratio. If it requires funds later, the firm can easily raise additional funds owing to its reputation.

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