The bird-in-the-hand argument espousing the importance of dividends or dividend relevance suggests that investors view a current (certain) dividend as less risky than future (uncertain) dividends or capital gains; nevertheless, proponents of this theory argue that this will have no significant impact on share price.

Question

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Proponents of the bird-in-the-hand argument believe that dividend payments have a positive impact on share price as investors prefer to receive certain payouts rather than waiting for uncertain capital gains in the future. So, the argument contradicts the statement that it will have no significant impact on share price.

The Bird-In-The-Hand Argument Espousing the Importance of Dividends or Dividend