Which of the following is not correct with regard to signaling theory, dividends and repurchases?...
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Which of the following is not correct with regard to signaling theory, dividends and repurchases? Group of answer choices Because M&M proved that dividends do not matter, dividends can never be considered a credible signal. A stock repurchase signals to the market the company is a good buy and management is confident of future prospects. An unanticipated increase in the dividend provides a credible good news or signal about the firm. Stock prices tend to decrease when there is a cut in dividends. Dividends can be viewed as a credible signal because there is a cost associated with paying a dividend.
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