Which of the following statements is true?

Question

Quizplus · Accepted Answer

Dividend initiations are typically seen as a strong signal to the market that management has confidence in the firm's ability to generate long-run cash flows. Dividend cuts, on the other hand, are often viewed negatively and can result in a decline in a firm's stock price. Dividend increases are seen as a positive signal, suggesting that the firm's profitability has improved. Option A is false as dividend initiations are seen as a strong signal. Option C is false as dividend cuts can have a negative impact on a firm's stock price. Option D is false because dividend increases suggest a sustainable increase in a firm's profitability rather than a temporary one.

Which of the Following Statements Is True