Firms tend to boost their earnings when they might not meet expected dividend levels. This happens more in firms with debt, especially before the Sarbanes-Oxley Act and after the 2003 dividend tax cut. It's also common in firms that pay out a lot of dividends, have CEOs who get high dividends and have high pay-performance links, and in firms that don't raise much money from outside sources. This earnings management can increase the chances of a dividend cut. Managers see expected dividend levels as a crucial earnings target.