Dividend irrelevancy theory: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Expand to incorporate clientele effect.) |
imported>Doug Williamson (Layout.) |
||
| (2 intermediate revisions by the same user not shown) | |||
| Line 1: | Line 1: | ||
In financial theory dividend payments and policies should be irrelevant when financial markets are efficient. | 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: | 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. | ||
| Line 9: | Line 10: | ||
== See also == | == See also == | ||
* [[Dividend]] | |||
* [[Lintner]] | * [[Lintner]] | ||
* [[Residual theory]] | * [[Residual theory]] | ||
| Line 15: | Line 17: | ||
* [[Capital structure]] | * [[Capital structure]] | ||
* [[Clientele]] | * [[Clientele]] | ||
*[[Signalling]] | |||
Revision as of 20:23, 14 November 2016
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.
