What does the Lintner empirical model suggest?
A)Firms rapidly adjust their dividends to changing economic conditions.
B)Firms pay out a constant proportion of their earnings as dividends.
C)Dividends are very sticky (i.e., they do not change frequently).
D)Firms pay out a constant proportion of their revenue as dividends.

Question

Quizplus · Accepted Answer

The Lintner empirical model suggests that dividends are very sticky, meaning companies do not frequently change their dividend payouts. This model indicates that firms prefer to maintain a stable dividend policy and are hesitant to make frequent changes to their dividend payouts, even in response to short-term fluctuations in earnings or economic conditions.

What Does the Lintner Empirical Model Suggest