The market's reaction to the announcement of a change in the firm's dividend payout is referred to as the:

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The market's reaction to a change in a firm's dividend payout is referred to as the information content effect, as it reflects the market's interpretation of the firm's announcement and its potential impact on future earnings and financial health. The clientele effect refers to the tendency of investors to prefer firms with a certain dividend policy, while the efficient markets hypothesis is a broader theory about the efficiency of financial markets. MM Propositions I and II are related to the capital structure of firms and the relationship between their cost of capital and capital structure decisions.

The Market's Reaction to the Announcement of a Change in the Firm's