Managers are reluctant to make dividend changes that they may have to reverse.

Question

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Managers are often hesitant to make changes to dividends because it sends a signal to shareholders and the market about the company's financial stability and future prospects. Reversing a dividend change can be seen as a negative signal and may harm the company's reputation and stock price. Thus, managers are careful and reluctant to make dividend changes unless they are confident that they can be sustained in the long term.

Managers Are Reluctant to Make Dividend Changes That They May