Which of the following answer is true?
A)Firms have long-run target dividend payout ratios.
B)Dividend changes follow shifts in long-term sustainable earnings.
C)Managers are reluctant to make dividend changes that might have to be reversed.
D)Firms have long-run target dividend payout ratios, dividend changes follow shifts in long-term sustainable earnings, and managers are reluctant to make dividend changes that might have to be reversed.

Question

Quizplus · Accepted Answer

All three statements are true. Firms tend to have a desired or target dividend payout ratio that they aim to maintain in the long run. Dividend changes are typically made in response to shifts in the company's long-term sustainable earnings. Managers are often hesitant to make frequent or significant changes to dividend policy, as this can create uncertainty or disappointment among investors if the policy needs to be reversed later on.

Which of the Following Answer Is True