When management changes a firm's dividend policy it has little to no impact on the views of shareholders regarding the future prospects of the firm.

Question

When management changes a firm's dividend policy it has little to no impact on the views of shareholders regarding the future prospects of the firm. ​

Quizplus · Accepted Answer

Management's decision to change a firm's dividend policy can have a significant impact on shareholders' views regarding the future prospects of the firm. A decrease in dividend payments may indicate management's belief that the firm's financial performance is expected to decline, while an increase may signal that the firm has achieved strong financial results and is optimistic about its future prospects. Shareholders may also interpret changes in dividend policy as a reflection of management's priorities and decision-making regarding the allocation of company resources.

When Management Changes a Firm's Dividend Policy It Has Little