Question 9.C-R-Q.4: Gamma plc recently announced a dividend increase of 10 per c...

Although an increase in dividends is often interpreted in a positive manner by shareholders, there may be occasions when it is not. These include occasions where:

■ the dividend increase does not meet the expectations of shareholders – these expectations may have been formed by earlier statements by managers, or by current and expected future profits
■ the dividend increase suggests a lack of growth opportunities resulting in surplus cash being returned to shareholders
■ shareholders feel that managers could have used the cash more wisely, given the growth opportunities available.