The dividend preference theory suggests that investors prefer receiving dividends in the future because of certain future market conditions.

Question

Quizplus · Accepted Answer

The dividend preference theory, or "bird-in-the-hand" theory, suggests that investors prefer receiving dividends now rather than in the future due to the certainty associated with current dividends compared to potential future capital gains.

The Dividend Preference Theory Suggests That Investors Prefer Receiving Dividends