Miller and Modigliani's dividend irrelevance theory says that the percentage of its earnings a firm pays out in dividends has no effect on either its cost of capital or its stock price.

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Miller and Modigliani's dividend irrelevance theory argues that the payment of dividends does not affect the value of the firm or the cost of capital, under certain assumptions about the market and the firm's investment opportunities. This theory suggests that investors are indifferent between receiving dividends and retaining earnings for future growth, and that changes in dividend policy should not impact stock prices.

Miller and Modigliani's Dividend Irrelevance Theory Says That the Percentage