103k views
2 votes
Dividend payments can serve as a signal to shareholders about managers' expectations of the firm's future performance.

A. True
B. False

User SuperNES
by
7.2k points

1 Answer

2 votes

Final answer:

Dividend payments can serve as a signal to shareholders about managers' expectations of the firm's future performance.

Step-by-step explanation:

Dividend payments can serve as a signal to shareholders about managers' expectations of the firm's future performance.

When a company pays regular and increasing dividends, it is seen as a sign of financial strength and confidence in the firm's future prospects. This can attract more investors, leading to an increase in the stock price.

On the other hand, if a company decreases or eliminates its dividend payments, it may indicate financial difficulties or a lack of confidence in the firm's future performance, which can cause the stock price to decline.

User Gangadhar Nimballi
by
7.7k points

Related questions

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.