Empirical evidence suggests managers

Question

Quizplus · Accepted Answer

Empirical evidence suggests that managers tend to keep nominal (dollar) dividend payments steady for long periods of time, a practice known as "smoothing". This is in contrast to Option A, as managers do not necessarily base their dividend payments on a residual model. Option C is also incorrect, as payout ratios (the proportion of earnings paid out as dividends) can fluctuate over time. Option D may be true in some cases, but is not necessarily the preferred method of dividend payment.

Empirical Evidence Suggests Managers