Due to clientele effect, Modigliani and Miller argue that the shareholders get what they expect and, thus, the value of a firm's stock is unaffected by dividend policy.

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Modigliani and Miller's dividend irrelevance theory suggests that in a perfect market, dividend policy does not affect a company's stock value because investors can create their own dividend policy through buying or selling shares.

Due to Clientele Effect, Modigliani and Miller Argue That the Shareholders