What does it mean to say that corporate managers "smooth" cash dividend payments? Why do managers do this?© BrainMass Inc. brainmass.com June 3, 2020, 9:32 pm ad1c9bdddf
Corporate managers "smooth" cash dividend payments means that there is consistency in payment of dividends through out the year to avoid the volatility. As per Lintner, even if earnings are high now, may be low later, so to avoid having to reverse dividend later, only want to move partway to target payment which leads to smooth cash dividend payments.
Moreover the advantages of the paying dividend are:
1. The investors prefer current ...
This explains the meaning of "smooth" cash dividend payments