Managers are reluctant to make dividend changes that may have to be reversed.

Question

Quizplus · Accepted Answer

Managers are often hesitant to change dividend policies because once a change is made, it may signal to shareholders that the company's future cash flows may be impacted. If the company is forced to reverse the dividend change in the future, this may lead to negative reactions from the market and shareholders, damaging the company's reputation and potentially decreasing the stock price.

Managers Are Reluctant to Make Dividend Changes That May Have