Why may a large increase in earnings not translate into a large increase in dividends?
A)the earnings will be taxed.
B)some investors may prefer capital gains.
C)managers wish to assess the earning's persistence.
D)the earnings may already be a part of retained earnings.

Question

Quizplus · Accepted Answer

Managers may want to ensure that the increase in earnings is sustainable before committing to higher dividends, as dividends are often expected to be stable or gradually increasing.

Why May a Large Increase in Earnings Not Translate into a Large