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A Pedagogic Note on Dividend Policy

Published online by Cambridge University Press:  19 October 2009

Robert E. Krainer
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Extract

For some time there has been disagreement among financial economists as to the effect of dividend policy on the valuation of a firm under conditions of uncertainty. On one side of the debate Miller and Modigliani (MM) [11] argue that the capitalization rate on shares is independent of the dividend policy of the firm. Gordon [6], [7], [8], and others, on the other hand, reject this proposition and present theories of valuation where share prices and capitalization rates are very much dependent upon the dividend policies of firms.

Type
Communications
Information
Journal of Financial and Quantitative Analysis , Volume 6 , Issue 4 , September 1971 , pp. 1147 - 1154
Copyright
Copyright © School of Business Administration, University of Washington 1971

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References

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