The terms irrelevance, bird in the hand, and tax effect have been used to describe three major theories regarding the way dividend payouts affect a firms value Explain what these terms mean, and briefly describe each theory ...

Dividend irrelevance refers to the theory that investors are indifferent between dividends and capital gains making dividend policy irrelevant with re ...

The terms irrelevance, bird-in-the-hand, and tax effect have been used to describe three major theories regarding the

Question:

The terms “irrelevance,” “bird-in-the-hand,” and “tax effect” have been used to describe three major theories regarding the way payouts affect a firm’s value. Explain what these terms mean, and briefly describe each theory.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...