【文章內(nèi)容簡(jiǎn)介】 s regarding the optimal dividend payout. Even so ,both evidence and logic suggest that investors prefer firms that follow a stable, predictable dividend policy. Because we discuss how dividend policy is set in practice, we must examine two other theoretical issues that could affect our view toward dividend policy: (1)the information content, or signaling, hypothesis and(2) The clientele effects. MM argued that investors’ reactions to change in dividend policy do not necessarily show that investors prefer dividends to retained earnings. Rather, they argued that price change following dividend actions simply indicate that there is an important information, or signaling, content in dividend announcements. The clientele effects to the extent that stockholders can switch, a firm can change from one dividend payout policy to another and then let stockholders who do not like the new policy sell to other investors who do. However, frequent switching would be inefficient because of(1)brokerage costs,(2)the likelihood that stockholders who are selling will have to pay capital gains taxes, and (3) a possible shortage of investors who like the firm’s newly adopted dividend policy. Thus, management should be hesitant to change its dividend policy, because a change might cause current stockholders to sell their stock, forcing the stock price down. Such a price decline might be temporary, but it might also be permanent if few new investors are attracted by the new dividend policy, then the stock price would remain depressed. Of course, the new policy might attract an even larger clientele than the firm had before, in which case the stock price would rise. In many ways, our discussion of dividend policy parallels our discussion of capital structure: we presented the relevant theories and issues, and we listed some additional factors that influence dividend policy, but we did not e up with any hardandfast guidelines that manager can follow. It should be apparent from our discussion that dividend policy decisions are exercises in informed judgment, not decisions that can be based on precise mathematical model. In practice, dividend policy is not an independent decision – the dividend decisions is made jointly with capital structure and capital budgeting decisions. The underlying reason for this joint decisions process is asymmetric information, which influences managerial actions in two ways: 1, In general, managers do not want to issue new mon stock. First, new mon stock involves issuance cost missions, fees, and so onand those costs can be avoided by using retained earnings to finance the firm’s equity needs. Also, asymmetric information causes investors to view mon stock issues as negative signals and thus lowers expectations regarding the firm’s future prospects. The end result is that the announcement of a new stock issue usually leads to a decrease in the stock prices. Considering the total costs involved, including both issuance and asymmetric information costs, managers strongly prefer to use retained earnings as their primary source of new equity. 2, Dividend changes provide signal about managers’ beliefs as to their firms’ future prospects, Thus, dividend reductions, Or worse yet, omissions, generally have a significant negative effect on a firm’s stock price . Since managers recognize this, they try to set dollar dividends low enough so