POLITICAL COSTS HYPOTHESIS Definition

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POLITICAL COSTS HYPOTHESIS predicts that firms with low agency and political costs and effective shareholders monitoring will distribute cash dividend and those with moderate agency and political costs may use stock dividends in lieu of cash dividends to separate themselves from firms having high agency and political costs. This indicates that cash dividend firms will face better long-term stock market valuation of their shares than stock dividend firms.

Learn new Accounting Terms

VAR is an acronym for Value-Added Reseller (usually of technology products) or, in finance, Value at Risk.

BSC see BALANCED SCORECARD.

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