Surveys conducted of managers tell us that they primarily see regular cash dividends as a way to precisely adjust their leverage ratio to the target suggested by the trade-off theory of capital structure.

Question

Quizplus · Accepted Answer

This statement is not supported by evidence and most managers do not make dividend decisions solely based on trade-off theory. Dividend decisions are influenced by various factors such as financial performance, cash reserves, growth opportunities, and shareholder preferences.

Surveys Conducted of Managers Tell Us That They Primarily See