Chartered Financial Analyst Level 2

Explanation

Option C is the most accurate statement about trends in payout policies.

Analysis of each option:

• Option A: While dividend initiations may be associated with some level of transparency, there isn't strong evidence of a consistent positive relationship between dividend initiations and enhanced corporate transparency
• Option B: Aggregate dividend amounts have generally increased globally, but payout ratios have not consistently declined; they vary by market conditions and company life cycles
• Option C (Correct): Dividend-paying companies are typically more mature, larger, and more profitable companies with stable cash flows. They tend to spend less on R&D because they are often in mature industries rather than growth industries that require heavy R&D investment

Companies that pay dividends generally represent more established businesses with predictable earnings, while non-dividend payers are often growth companies that reinvest earnings back into the business.