Which of the following statements is false?
A) If firms smooth dividends, the firm's dividend choice will contain information regarding management's expectations of future earnings.
B) Because of the increasing popularity of repurchases, firms cut dividends much more frequently than they increase them.
C) Announcing a share repurchase today does not necessarily represent a long-term commitment to repurchasing shares.
D) While cutting the dividend is costly for managers in terms of their reputation and the reaction of investors, it is by no means as costly as failing to make debt payments.

Question

Quizplus · Accepted Answer

The statement that firms cut dividends much more frequently than they increase them is false. In fact, studies have shown that dividend increases are more common than dividend cuts, particularly among established firms with a long history of dividend payments.

Which of the Following Statements Is False