Journal of Financial and Quantitative Analysis Vol. 7 No. 3 1972
Dividend Policy and Increasing Discount Rates: A Clarification
Abstract
For almost a decade, Myron Gordon has argued repeatedly that an enterprise's dividend policy can affect its share price [2, 3, and 4]. The essence of his argument is that risk-averse investors are likely to perceive current dividends as less risky than future ones. Consequently, a corporate decision to reduce current, in favor of increased future, dividends will reduce share prices, even when the funds are invested to yield the firm's cost of capital.
- DOI
- 10.2307/2329800
- Volume
- 7
- Issue
- 3
- Pages
- 1757
- Sources
- crossref openalex