Corporate finance. i need tis answer urgently?

Question

what are some drawbacks of following a residual dividend policy?what do firms typically do in practice?

Answer 1

The obvious drawback is that once the money is gone, it can't be used for investment of any sort.  In practice most growing companies invest everything in future growth giving out no dividends, while mature slower growing companies tend to either give regular slowly growing dividends or invest the money in themselves in other ways like buying other companies and assets (essentially buying the growth), or buying back stock in lieu of dividends - stuff like that