Dividend Irrelevance Theory

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DEFINITION of 'Dividend Irrelevance Theory'

A theory that investors are not concerned with a company's dividend policy since they can sell a portion of their portfolio of equities if they want cash.

BREAKING DOWN 'Dividend Irrelevance Theory'

The dividend irrelevance theory essentially indicates that an issuance of dividends should have little to no impact on stock price.

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RELATED FAQS
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    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  3. When does the holding period on a stock dividend start?

    The holding period on a stock dividend typically begins the day after it is purchased. Understanding the holding period is ... Read Full Answer >>
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    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
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