Modigliani and Miller's dividend irrelevance theory states that the total value of a firm is not affected by the ratio of debt to equity in the capital structure.

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Modigliani and Miller's dividend irrelevance theory suggests that the value of the firm depends on its earnings power and risk, and not on how it chooses to distribute its earnings between dividends and retained earnings or its capital structure. This theory is based on certain assumptions and is not applicable in all situations, but it generally holds that the value of the firm is independent of its dividend policy.

Modigliani and Miller's Dividend Irrelevance Theory States That the Total