Which one of the following statements is correct?
A) Companies prefer to cut dividend payments rather than borrow money to fund a short-term cash need.
B) Share repurchases tend to increase agency costs.
C) Maintaining a steady dividend is a key goal of most dividend-paying companies.
D) Short-term fluctuations in cash flows are the key factor in determining a company's dividend policy.
E) Stock prices tend to ignore unexpected changes in dividend payments.

Question

Quizplus · Accepted Answer

Maintaining a steady dividend is a key goal of most dividend-paying companies. Companies strive to maintain a reliable dividend policy to attract and retain investors, who are often seeking steady income streams. A sudden or erratic change in dividend payments can result in a decline in the stock price and overall market confidence.

Which One of the Following Statements Is Correct