Conflicting arguments continue as to the impact of dividend policy to stock price. Which of the following theories or arguments is most valid?

Question

Quizplus · Accepted Answer

All of the theories or arguments mentioned (Dividend Irrelevance Theory, the "Bird in the Hand" theory, and the Dividend Preference Argument) may be valid under different market conditions. The Dividend Irrelevance Theory suggests that dividend policy has no impact on stock price, while the "Bird in the Hand" theory argues that investors prefer dividends over potential future capital gains. The Dividend Preference Argument suggests that investors prefer higher dividends, and companies that pay higher dividends are seen as more stable and attractive investments. Ultimately, the impact of dividend policy on stock price may depend on factors such as market conditions, investor preferences, and the specific characteristics of the company in question.

Conflicting Arguments Continue as to the Impact of Dividend Policy