With perfect capital markets,investors prefer share repurchases to receiving dividends.

Question

Quizplus · Accepted Answer

In perfect capital markets, investors are indifferent between share repurchases and receiving dividends due to the Modigliani-Miller theorem, which states that the firm's financing decisions (such as whether to distribute profits as dividends or to repurchase shares) do not affect its value in a world without taxes, transaction costs, or other market imperfections.

With Perfect Capital Markets,investors Prefer Share Repurchases to Receiving Dividends