Which of the following are ways that a firm can reduce cash flows in order to prevent managers from wastefully spending excess cash flows? Check all that apply.
A) Funneling excess cash flows back to shareholders through higher dividends
B) Minimizing the amount of debt in the firm’s capital structure so that the firm can borrow money at a reasonable rate when good investment opportunities arise
C) Funneling excess cash flows back to shareholders through stock repurchases
D) Increasing the amount of debt in the firm’s target capital structure in the hope that higher debt-service requirements will force managers to be more disciplined
