Dividend irrelevancy theory: Difference between revisions
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imported>Doug Williamson (Expand to incorporate clientele effect.) |
imported>Doug Williamson (Align with course materials - linked to Signalling) |
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But in practice decisions about dividend levels are important because of: | But in practice decisions about dividend levels are important because of: | ||
#Their informational content. This informational content is known as ''signalling''. | #Their informational content. This informational content is known as ''[[signalling]]''. | ||
#The potential to move closer to, or away from, a firm's optimal capital structure. | #The potential to move closer to, or away from, a firm's optimal capital structure. | ||
#Possibly, [[clientele]] effects. | #Possibly, [[clientele]] effects. | ||
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* [[Capital structure]] | * [[Capital structure]] | ||
* [[Clientele]] | * [[Clientele]] | ||
*[[Signalling]] | |||
Revision as of 15:15, 15 July 2015
In financial theory dividend payments and policies should be irrelevant when financial markets are efficient.
But in practice decisions about dividend levels are important because of:
- Their informational content. This informational content is known as signalling.
- The potential to move closer to, or away from, a firm's optimal capital structure.
- Possibly, clientele effects.
