Trends in dividends Figure 14.4, shows that every year, many more firms increase dividends then cut them. "Managers use dividends to signal confidence in their business. Cutting them sends a negative signal. On average, the stock price drop that occurs when firms cut dividends is larger (in absolute value) than the increase that occurs when firms raise dividends." The statement above is (Select from the drop-down menu.) FIGURE 14.4 U.S. Publicly Listed Companies Maintaining, Increasing, or Decreasing Dividends 1959 to 2019 Among firms that pay dividends, the most common practice is to increase dividends yearly, with dividend cuts being relatively rate. 90 80 Firms increasing dividends 70 Public U.S. Dividend-Paying Firms (%) m Firms maintaining dividends 30 20 Firms decreasing dividends a 10 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 Year