Financial signaling has been raised as an argument in the battle...

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Financial signaling has been raised as an argument in the battle over the relevancy of dividends. Which of the following statements indicate financial signaling argument?

A. The decrease of dividends should be viewed by investors as positive news, as it indicates the company has better opportunities for the earnings

B. The reported accounting earnings of a company, not dividends, are a proper reflection of the economic earnings

C. The price of a firm's stock may react unfavourably to an increase in dividends

D. The cash dividends speak louder than words to convey more information management's expectations of the future

Answer: Option D

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