Assume all things are held constant other than the item in question, for each of the companies below:
- A company with a large proportion of insider ownership all of whom are high-income individuals.
- A growth company with an abundance of good investment opportunities.
- A company experiencing ordinary growth that has high liquidity and much unused borrowing capacity.
- A dividend paying company that experiences an unexpected drop in earnings from a trend.
- A company with volatile earnings and high business risk.
Required:
Explain whether or not you would expect each company to have a medium/high or a low dividend payment ratio and the reasons for such categorization.