Which of the Following Statements Is False

question 28

Multiple Choice

Which of the following statements is false?

• A) Firms adjust dividends relatively infrequently, and dividends are much less volatile than earnings. This practice of maintaining relatively constant dividends is called dividend signaling.
• B) When a firm increases its dividend, it sends a positive signal to investors that management expects to be able to afford the higher dividend for the foreseeable future.
• C) The average size of the stock price reaction increases with the magnitude of the dividend change, and is larger for dividend cuts.
• D) When managers cut the dividend, it may signal that they have given up hope that earnings will rebound in the near term and so need to reduce the dividend to save cash.

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Definitions:

Inherent Goodness

The fundamental quality of being good or possessing positive moral values naturally.

CSR

Corporate Social Responsibility; a business model where companies integrate social and environmental concerns in their operations and interactions with stakeholders.

Venture Philanthropy

Investing in social or environmental causes using strategies akin to those in venture capital, aiming for both societal impact and financial return, with a focus on innovation and sustainability.

Venture Philanthropists

Individuals or organizations that invest in non-profits or social enterprises with the expectation of generating a measurable social impact alongside a financial return.