Why are dividend changes rather than their absolute level perceived to be more important to managers and shareholders?
A)managers only change dividends under threatening conditions
B)dividend changes are thought to signal future expectations
C)MM states that the absolute level of dividends is irrelevant
D)changes determine whether borrowing must occur

Question

Quizplus · Accepted Answer

Dividend changes are perceived to signal future expectations because they may indicate a change in the company's financial health, profitability, and growth prospects. As a result, investors often pay more attention to changes in dividends rather than their absolute level when making investment decisions.

Why Are Dividend Changes Rather Than Their Absolute Level Perceived