In practice,firms tend to increase their dividend

Question

Quizplus · Accepted Answer

Firms only increase their dividend when they believe they can sustain the increased payout indefinitely. This is because investors rely on the stability and consistency of dividend payments, and any sudden decrease in dividends can negatively affect shareholder value. Therefore, firms usually increase dividends only when they are confident in their ability to maintain the increased payout in the long-term.

In Practice,firms Tend to Increase Their Dividend