Which one of the following statements is false? a. Tax-exempt institutional inve

Question

Which one of the following statements is false?

a. Tax-exempt institutional investors prefer a high dividend payout policy because of their fiduciary responsibilities and prohibitions from spending principal

b. Corporate investors benefit from at least a 70% exclusion from taxes on dividend income.

c. Flotation costs are a consideration which favors a low dividend payout.

d. Higher taxes on dividends than on capital gains and the existence of clienteles in an equilibirum dividend market are factors that companies favors a high dividend payout policy.

Explanation / Answer

B. Option B is False

Option A says tax-exempt institutional investors prefer a high dividend payout policy which is true

Option C says  Flotation costs are a consideration which favors a low dividend payout. which is also right

And Option D says Higher taxes on dividends than on capital gains and the existence of clienteles in an equilibirum dividend market are factors that companies favors a high dividend payout policy which is correct

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