Question

If there are any fixed costs associated with capital raisings, what impact do you think firm size will have on dividend policy?

Answer 1

If there are any fixed cost associated with capital rasings , there will impact on dividend policy of firm size as fixed cost increase then dividend will get affected .

A company having more leverage in their financial structure and consequently, more interest payments may to decide for a low dividend payout, so as to increase their net worth and to make sure that it can make payment of financial charges even in case of earning of the company is falling. Whereas a company utilizing more of own financing will prefer high dividends.