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January 1, 1961The Journal of BusinessOpen Access

Dividend Policy, Growth, and the Valuation of Shares

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Authors

MMMerton H. MillerUniversity of ChicagoFMFranco ModiglianiNorthwestern University

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Overview

Examines dividend policy effects on share price in ideal markets, suggesting implications for real-world scenarios.

Key Points

  • The aim is to clarify the theoretical gaps in understanding how dividend policy affects share valuation and market behavior.
  • Analyzed dividend policy effects in ideal economies with perfect markets and rational behavior.
  • Explored investor perceptions of share capitalization and the relationship between growth rates and dividends.
  • Evaluated the modifications needed when removing certainty from the market assumptions.
  • Establishes a foundation for understanding investor behavior regarding dividend policies and share pricing.
  • Identifies common misconceptions regarding the relationship between dividends and profit growth.
  • Suggests adjustments to valuation models considering real-world market imperfections.

Cite This Study

Miller et al. (1961) studied this question.

synapsesocial.com/papers/69dff81abdd89ea5318609aehttps://doi.org/10.1086/294442
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Also Consider

Synapse has enriched 2 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Rational Expectations and the Theory of Price Movements1961 · 5,664 citations
  2. 2A Discriminant Function for Earnings-Price Ratios of Large Industrial Corporations1959 · 35 citations