Dividend irrelevancy theory

From ACT Wiki
Revision as of 15:15, 15 July 2015 by imported>Doug Williamson (Align with course materials - linked to Signalling)
Jump to navigationJump to search

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:

  1. Their informational content. This informational content is known as signalling.
  2. The potential to move closer to, or away from, a firm's optimal capital structure.
  3. Possibly, clientele effects.


See also