The dividend irrelevance theory, proposed by Miller and Modigliani, says that as long as a firm pays a dividend, how much it pays does not affect either its cost of capital or its share price.

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The dividend irrelevance theory, proposed by Miller and Modigliani, is based on the assumption of perfect markets without taxes or transaction costs. In such markets, the theory suggests that the value of a firm is determined by its investment decisions and not by its dividend policy. However, in real-world markets with taxes and transaction costs, dividend policy can affect the cost of capital and share price, and therefore, the theory is not completely applicable.

The Dividend Irrelevance Theory, Proposed by Miller and Modigliani, Says