Economics · Dividend Policy

Which one of the following statements is false regarding dividend policy theories?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1The 'Bird-in-the-hand theory' in reference to dividend decisions was developed by Myron Gordon.
2The MM model asserts that the value of the firm is not affected whether the firm pays dividends or not.
3According to Walter's model, the optimal payout ratio for a growth firm is 100%.✓
4Efficient dividend policy is an important tool to achieve the goal of wealth maximization.

Correct answer

According to Walter's model, the optimal payout ratio for a growth firm is 100%.

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