Which of the following statements is FALSE?
A)If firms smooth dividends,the firm's dividend choice will contain information regarding management's expectations of future earnings.
B)Because of the increasing popularity of repurchases,firms cut dividends much more frequently than they increase them.
C)Announcing a share repurchase today does not necessarily represent a long-term commitment to repurchase shares.
D)While cutting the dividend is costly for managers in terms of their reputation and the reaction of investors,it is by no means as costly as failing to make debt payments.

Question

Quizplus · Accepted Answer

According to empirical evidence, firms tend to be more conservative with cutting dividends than with increasing them. This is because investors often view dividend cuts as a negative signal about the firm's future prospects and financial health, whereas dividend increases are viewed more positively. Therefore, while firms do cut dividends, it is not as frequent as suggested in option B.

Which of the Following Statements Is FALSE