In examining investors' preferences for dividends, it is useful to begin with the concept of...
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In examining investors' preferences for dividends, it is useful to begin with the concept of dividend irrelevance. Dividend irrelevance suggests that in world with no taxes or brokerage (or transaction) costs, firms and investors are indifferent to the paying or receiving of dividends. However, as these restrictions are relaxed, various factors suggest that firms should pursue high or low payouts. One such factor is: Firms Incur various legal and administrative costs (called flotation costs) when they issue new stock. payout ratio. Based on the factor described, firms, in general, will tend to favor Gel Now Save & Continue
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