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