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(a) Market reacts positively to dividend increases and negatively dividend decreases. Three explanations are provided for this notion. Information...

(a) Market reacts positively to dividend increases and negatively dividend decreases. Three explanations are provided for this notion.

i. Information content (signalling) hypothesis,

ii. Free cash flow hypothesis

iii. Clientele effect

Discuss these hypotheses related to dividend policy

Top Answer

Discussion of the three hypotheses related to dividend policy Information content (signalling) hypothesis Information content... View the full answer

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Other Answers

i. Information content (signalling) hypothesis This is the hypothesis that states that when the information dividends shows... View the full answer

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