MTQ

The board of Empire co are disusing their dividend policy and there have been various statements made by the directors

Director A : our shareholders rely on the level of dividend we pay and we cannot ignore that. We must pay out a dividend as expected otherwise our shareholders will be forced to sell shares or invest elsewhere

Director B: I know that when I was young that if I got a rise in my allowance in particular week then I was more likely to get it again. It was expected. We must pay that is expected

Director C : What matters is the underlying value of the projects that we are doing now and we will do in future. We should stop wasting time discussing this

Director D: What matters is what we can afford in cash. If we are short of money then it should be discussion over— less dividend will have to be paid. What we could then do is issue more shares instead. I think it is called scrip dividend.

Question

Which director supports signalling effect of dividend and which director supports dividend dependence theory

Correct answer is director B and director A respectively. Sir can you please explain me