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Financial Management - DIVIDEND POLICIES

Dividend Relevance - DIVIDEND POLICIES

   Posted On :  20.06.2018 05:47 am

Myron Gordon and John Lintner have argued that shareholders are generally risk averse and prefer a dividend today to the promise of the greater dividend in the future.

Dividend Relevance
 
Bird-in-the-Hand Argument
 
Myron Gordon and John Lintner have argued that shareholders are generally risk averse and prefer a dividend today to the promise of the greater dividend in the future. Hence shareholder’s required return is affected by a change in the dividend policy: Reducing today’s dividend to invest in the firm at the initial required rate of return destroys value if shareholders’ required rate of return increases due to this decision. 
Tags : Financial Management - DIVIDEND POLICIES
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