Which of the following theories is supported by the argument that shareholders can transform a company dividend policy into a different policy by means of investors buying and selling on their own account?
A)"bird-in-the-hand" theory
B)dividend irrelevance theory
C)residual distribution model
D)tax preference theory

Question

Quizplus · Accepted Answer

The argument that shareholders can transform a company dividend policy into a different policy by means of investors buying and selling on their own account supports the dividend irrelevance theory. This theory suggests that the company's dividend policy has no effect on its value, because shareholders can achieve their desired cash flows by buying and selling shares on their own. Therefore, any change in the dividend policy will have no impact on the company's overall value.

Which of the Following Theories Is Supported by the Argument