Ownership, payout, firm investment and growth: a comprehensive study for Belgian firms Hasselt University
Within the neo-classical world of Miller and Modigliani (1961), dividend policy is irrelevant. The M&M-theorem proposes that dividends drop out as a pure residual once the optimal level of investment has been determined, and that, therefore, dividend policy has no impact on firm value. In practice, dividend policy is anything but irrelevant: dividend policy can be used as a partial solution to agency problems, inherent to the specific ...