Empirical evidence about the behavior of financial managers suggests that firms ________ repurchase activity and they ________ dividend payments.
A) smooth, smooth
B) smooth, do not smooth
C) do not smooth, do not smooth
D) do not smooth, smooth

Question

Quizplus · Accepted Answer

Empirical evidence suggests that financial managers do not smooth repurchase activity, meaning that they tend to buy back shares in large amounts infrequently. However, they do tend to smooth dividend payments, meaning that they are more likely to maintain a stable or increasing dividend payout over time, adjusting only when necessary to signal changes in the firm's financial performance.

Empirical Evidence About the Behavior of Financial Managers Suggests That