Cash retained and reinvested in the business is not subject to

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Cash retained and reinvested in the business is not subject to

An unusual occurrence in a manufacturing company provided a real world opportunity to test this assumption: A new collective bargaining agreement for a group of welders resulted in the sudden elimination of a long standing incentive plan. The immediate result was that production did indeed drop. But as with the preschool study, this researcher decided to continue tracking the company records and discovered that, in the absence of rewards, the welders’ production soon began to rise and eventually reached a level as high or higher than it had been before.[4].

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Replica Chloe Handbags MIT professors Modigliani and Miller have made the same point, suggesting that in a world with no transaction costs and no investment taxes, dividends do not matter. In the real world, where these twin menaces are here to stay, dividends should be a net negative. Cash retained and reinvested in the business is not subject to dividend taxes and incurs no transaction costs.. Replica Chloe Handbags

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