The "tax preference theory" states that

a given change in dividend policy will affect stock prices and capital costs. a firm's dividend policy is not at all influenced by the corporate taxes or the value of stock or the cost of capital.

because long$-$term capital gains are subject to somewhat less onerous taxes than dividends, investors prefer to have companies retain earnings rather than pay them out as dividends.

the firm's value will be maximized by low taxes and high dividend payout ratio.