Dividend irrelevancy theory

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Revision as of 21:49, 12 November 2016 by imported>Doug Williamson (Add link.)
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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