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Both Modigliani and Miller (MM); and De Angelo and De Angelo (DD) showed the effect of dividend policy under a perfect capital market. They each

Both Modigliani and Miller (MM); and De Angelo and De Angelo (DD) showed the effect of dividend policy under a perfect capital market. They each came up with different conclusion. According to MM, dividend policy does not affect firm value, but according to DD dividend policy can affect firm value. Can you explain why this is the case?

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