Payout policy - Relevance of payout policy

5 important questions on Payout policy - Relevance of payout policy

What is residual theory of dividends

a school of thought that suggests that the dividend paid by a firm should be viewed as a residual

What is a clientele effect?

the argument that different payout policies attract different types of investors but still do not change the value of the firm.

What is the dividend relevance theory?

The theory that there is a direct relationship between firm's dividend policy and its market value.
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What is the bird-in-the-hand argument

the belief that investors see current dividends as less risky than future dividends or capital gain.

What is information content?

The information provided by the dividends of a firm with respect to future earnings, which causes owners to bid up or down the price of the firm's stock.

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