The Modigliani and Miller dividend irrelevancy theorem states that
A)dividends are preferable to share repurchases.
B)the timing of cash distributions is important.
C)the timing of cash distributions is unimportant.
D)share repurchases are preferable to dividends.

Question

Quizplus · Accepted Answer

The Modigliani and Miller dividend irrelevancy theorem states that the timing of cash distributions (i.e., whether a company pays dividends or repurchases shares) is unimportant in determining the overall value of the firm. Therefore, neither dividends nor share repurchases are preferable in terms of maximizing shareholder value.

The Modigliani and Miller Dividend Irrelevancy Theorem States That