Which of the following are true?
I.Firms have long-run target dividend payout ratios.
II.Dividend changes follow shifts in long-term, sustainable earnings.
III.Managers are reluctant to make dividend changes that might have to be reversed.
A)I only
B)II only
C)III only
D)I, II, and III

Question

Quizplus · Accepted Answer

All three statements are true. Firms often have a target dividend payout ratio that they try to maintain over the long run, as it creates stability for shareholders. Dividend changes are typically based on shifts in sustainable earnings rather than short-term fluctuations in profits. Finally, managers may be reluctant to change dividends frequently, as this can create uncertainty for shareholders and damage the firm's reputation for stability.

Which of the Following Are True