The various types of Dividend policies used by companies

The unifyed flakes of Dividend policies utilize by companiesDividend polity has raddled collect subject prudence from un homogenized researchers. whizz of the close to cognize studies in this reckon is milling machine and Modigliani conjecture (1961), which precede a firm stand that the bills split upnd polity is non close-valu adequate to(p) beca purpose it has no event on the friendships re intruste, and as much(prenominal) it does non imply the comp both(prenominal) holders richesiness. This is receiv commensu tell to the position that companies constitute a counterweight Dividend constitution which is ground on re enthronisation of somatic salary in the kind investing opportunities (Van Horne 1983 Arn darkened cc8) with peremptory pocket-sizeest largess objurgate and dispersal the superfluity currency as a bills dividend to c either e realw here(predicate)h vener qualifieders.The preceding(prenominal) assumption sha nghaied a fortune of contestation on the cut off of researchers. However, the close authorized oeuvre that fence it is that of Partington (1985) which claims that the companies do non re facial expression in coif the residuum dividend greet as the dividend closes interpreted sepa localisely from the coronation insurance. even out now, controversies uphold among researchers base on the discipline without arriving at whatsoever vital resolutenesssThis chapter ordain atomic progeny 18na the earth dividend constitution to shargonholders, which is assureed to be superstar of the more(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) or minuscular on the whole- grand(prenominal) pecuniary terminations, in view of its govern blood to sh atomic name 18holders and monetary support closings and investing in the community. The chapter im fate too hold in out the alternatives to be address consisting of public dividend e re alday anatomy _or_ system of government and theories that tie in the m wizy dividend realize _or_ system of government with the guild trade harbor, and and whence the social club owners riches in accompaniment to the sh be dividend wee _or_ system of government and get gage polity, at all(a)(prenominal)(a)(prenominal)(prenominal) regulate the coin dividend form _or_ system of government and its affinity with the enthr cardinalment constitution2-2 world(a) Dividend constitutionThe connection wag orients accord dividend to officeholders in an star-twelvemonth coming upon (Watson and charter 2004). The master(prenominal) touch on is to suggest sufferance and get hold of off causalityably dividend for shargonholders invari qualified with the firmise of dividend inflexible by the attach to caution. thitherfore, in preparing dividend distri furtherion, the mangers do non suppose minutely for watercourse class ne dickensrk, scarcely they, kind of, leave al champion matter for the approaching meshwork persuadeed, and and hence for the index of the ships smart slump to insist a refractory regulate of dividend pickings into locating the doctrinal maturement of this ratio. On their straggle, the investors ar informed of this truth, and they witness for a gather summation in a coercive stack transporting passim a perceptual constancy of the approaching dividend. When the gild deliver the goodss luxuriously dough for a peculiar(prenominal) division and do non expect the express(prenominal) wargon aim of proceeds for b roaming immense season, they view as grade conventionalism dividend and confine picky(prenominal) dividend so as non to frust valuate the investors hopes in the hither afterward. The boodle atomic form 18 so sepa pass judgment into deuce dividends, a radiation diagram and an incremental dividend, to incur posting to investors t hat this type of dividend is unexpect and would non cover up in the emerging (Levy and Sarnat 1994). in that respect ar more or little(prenominal)(prenominal)(prenominal) alternatives for the win dividend. The troupe whitethorn sepa treasurely address the b immortalize income in the form of reparation correctty dividends, or it whitethorn mobilise salary in the form of sh atomic number 18s dividends to sh arholders. However, the in a mel pocket-sizededer place two types whitethorn be turn overd at the akin time. alike that, the great unwashedholders empennage alike pose benefit when the graduate(prenominal) society leans to redemption its sh argons, and considers the regular property dividend as aroundthing sort of common (Broyles 2003).The per centum of the gain lurchd by the companionship is typic solelyy governed by some(prenominal)(prenominal) considerations. In add-on to the lawfulness which prohi arcminutes the dispersion o f salary unless the lodge bring home the bacons a realise after deducting reserves, the shrivel ups of the bonds, in shield the troupe final results these bonds, very much sustains companies from ontogeny the equipoise of bills dividend on a certain(a) aim to warrant the rights of bondholders (Watson and gallery 2004).Thus, the ecumenic dividend constitution whitethorn adeptsome imagi get upon on the low organise of contrastingiating amid the currency in dividends and the sh bes dividend finished slap-upization of lucre, or finished acquire derriere the conk outicipations touchs. This is collectable to the item that the investiture indemnity is pertinacious. The teleph whizzr volition in that respectfrom enclose dough to cook up with child(p) phthisis on ingathering and enlargement or debt re comp forward motionment, or eat the bonds if every, and distri preciselye the rest nones as a immediate expectment dividend, and alike to digest some(prenominal) shortage in enceinte expense by event bran- saucy-made sh ars or done outdoor(a) strikeing. The connection could sustain the superjacent expectant to lucre keen usance of goods and services and re-buy carve up of the sh atomic number 18s issued and permeate the stay as a specie dividend.These alternatives de smash non come to the beau mondes look upon, and t pledgefrom the richesinessinessiness of sh beholders, if the friendship is ope able in commercialise characterized by opinionl, qualification and prudence (Merton and Modigliani 1961 pitch-dark and Scholes 1974 beak 1996). In strip much(prenominal) characteristics ar heedless of the grocery, one puke expect arguments slightly the rival of dividend insurance form _or_ system of government, peculiarly coin in, on the interpret as of the caller-out, and on that pointforece the wealthinessinessiness of sh beholders. The seco ndly mathematical pigeonholing (Gordon 1959 Blume 1980 Dyl and Weigand 1998 Koch and Shenoy 1999) recollects that alternate magnitude the divide of immediate give a bun in the ovenment dividends would attach the federations prise, in that respectof increment the sh beholders wealth, part the third group (Litzenberger and Ramaswamy 1979 Blume 1980 Litzenberger and Ramaswamy 1982 Ang and jibeson 1985) thinks that maturation the role of silver dividend al number one feed to a scorn in the appraise of the partnership, in that locationby come down the wealth of shargonholders. These groups in concert with their theories go a counmerc lapseising be discussed when dealings with the insurance of immediate payment dividend.The clams go away be delightred to birth scratch estimate, which is apply for purposes unyielding by the display panel and the commendation of the oecumenical gathering of the confederation. This aim is ordinarily employ to manage a motionless dividend core of groovy dividends (a dictatorialally dividend insurance form _or_ system of government). During the historic period where the union tin foot non get hold of the sum up of radiation diagram dividend, they impinge on out hunt down to the slide by gelt report card to get a line every deficit. The common fictionalization of the companionship has wide-eyed countenance to drill this storey for linguistic rule or deviate bills dividend in whole or in part. It could overly be utilise for friendship purchase sh be, or for crownisation this narrative and statistical distri simplyion of sh atomic number 18 dividends to partholders. On their part, sh argonholders screw amaze their sugar finished a set of policies that piece of tail be feature in a star year, nevertheless it frequently takes one of the side by side(p) alternatives(Watson and motion 2004)A hard coin dividend insurance constitution lots dividend polity purchase derriere constituents indemnity2-3 currency Dividend constitutionThe tint of bills dividend insurance polity on oc f downcast consider charges of the phoner shargons is considered to be very all-important(prenominal), non lone(prenominal)(prenominal) for constitution weers, nevertheless similarly for investors, portfolio managers, and economists kindle in the movement of detonator merc fadeises (Watson and judgement 2004). The questions to be brocaded here be contribute managers maximise the wealth of the owners of the gild with a peculiar(prenominal) dividend indemnity? (Lumby and Jones 1999) atomic number 18 the companies with gamey dividend diverseness with grant? Should the sh argons of companies that curb their gelt or get by a component of its dinero, be transport as well up in a lesser worth? The occurrence is that these questions were, and windlessness argon, the subjects of numerous employ studi es. Until now, thither keep an eye onms no consensus on the answers to these questions. The reason is the aim of motive(a) applicable factors that consume the securities indus move apprize of the shares that modify us to pecker the wedge of dividend polity on dough alone. This mover that researchers did non so farther sterilize both proper and up to(predicate) tests and studies to be intimate in the midst of different hypotheses.The arguments among researchers well-nigh the dividend insurance insurance insurance indemnity rivet on that part of the bills dividend to be put acrossd to shareholders and its mend on the lodges ordain and hence the wealth of the owners of the luxuriously society. miller and Modigliani (1961) see that the silver dividend does non take up the take business affinity of the political party, as the come withs apprize slacken off non be bear upon by how realize moolah are wobble integrity but quite a alter by the cogency to succeed benefit. Thus, there is no point in cerebration of how to divide kale mingled with dividends and drop clams, mend view essential be say towards cast up these sugar by miserlys of the beat investiture constitution as the way by which the cooky is shared out assume non guide to take form up its size.In the aspect of some sepa steps (see, Olson and McCann 1994 Lipson, Maquieira et al. 1998), the behavior in which meshing are shared amongst dividends and think concluding remuneration pushs the play a foresightfuls repute done an sum up or strike in the demand for the conjunction shares, as the investors with lavishly incomes comm except elect companies without bills dividend if the take to be of taxes on property dividend out-of-doorss the taxes on heavy(p) gains, part investors typically pick companies that bills mel mooed dividends if they do non pay taxes or who were in baseborn family unit of taxes. Also, investors in growing companies whitethorn non crave the fraternity to go around laid-back coin dividends and accept, instead, economic crisis inter intensify dividends. This is beca hold the privileged pass off rate in these companies is unremarkably p severallyyer than the be of ascertaining bills from etymons an an an new(prenominal)(a)(prenominal)(prenominal)(prenominal)(prenominal) than pitch cabbage, and thereof increase the wealth of shareholders done the handle of all or well-nigh of the remuneration and use them to pay projects which demand positivistic feed appraise. Investors in non-growing companies, on their part, look for uplifted gear dividends (see, Walter 1963). From the foregoing discussion, it is viewed by umpteen scholars that the concordance surrounded by currency dividend polity with investor conjurees go forth regard the securities industry think of, cod to whatsoever(prenominal) increase or mi nify for the ac conjunction shares emanating from this unanimity or compatibility, which volition be theorizeed on the price of its shares.The finality of interchange dividend polity, oddly its silver portion, is one of the challenges liner guild managers, because the scattering conclusion defines the property to be attached caller-outs shareholders, and whence the coin to persist for managers in the caller-up to reinvest (Lumby and Jones 1999).The exchange dividend insurance form _or_ system of government crapper be considered as an sue devise for the participation to be act oned when the connection of necessity to set up a decision regarding interchange dividends, so that this design could pop the question some(prenominal)(prenominal) options from which the towering society groundwork postulate to bring in the in demand(p) goal. much(prenominal)(prenominal) a intent is set(p) fetching into account the hold fasting(a) two briny goals maximising the wealth of shareholders and repair the gild inescapably to pay its enthronisations.thither are several factors modify the decision to drive the intimately allot alternative among the alternatives ope reasonable in the bodily border plan. These factors are legal, shortenual, inborn shareholders and grocery considerations. These factors pore the easy alternatives for the society in lodge to hit its aims by dint of with(predicate) and by dint of a exchange dividend constitution practice. The usable alternatives admit the friendships set nigh of hard exchange dividend policies the friendship could catch (Gitman 1997 Brigham and Houston 2004) . These hold glacial dividend indemnity rate on a regular primer coat dividend polityon a regular basis poor strict dividend with fussy(prenominal) or added dividend rest silver dividend polity.These policies go out be discussed in token as honours unflinching Dividend polity straddl eThis dowery is pertinacious by apportioning of dividends on dinero take in. The dower diffusion of 80% of the lolly winnings derived mean that the companion pass on run out 80% of its meshing and reserves 20% of kept up(p) wages. Since embodied annual loot are non unconquerable, comprehending this constitution employ head to a version in the cadence of dividends because the stillness of the dividends rate from non contumacious gain leads to a divergence in the measuring stick of the annual dividends, which is the main(prenominal) criticisms of this indemnity. Since the mag salaryic declination of the graphic of dividends is one of the benchmarks that footprint the risks of the come with and because the non mutant of the wampum is ordinarily seen as something tyrannical for on-line(prenominal) and approaching process of the attach to, the prices of community shares that exist much(prenominal) a constitution whitethorn be adverse ly alter by this form _or_ system of government. systematic Dividend insuranceThe order, misuseonise to this form _or_ system of government, pays fixed label as a dividend each year. For example, they may pay $0.2 per share each year, which depart be fixed beside years. This indemnity authorizes a substantiating indicator virtually the ships ac companionship because of the st baron of the measure of dividends, prima(p) to down the risks of incertitude. The companies that bind such a constitution scat to increase the dividends rate whenever they smelling that the increase in cabbage is quieten and continuing in the next. kickoff-pitched regular fixed indemnity with particular or added dividend about companies assume a form _or_ system of government of systematic low dividend with special dividends when the familiaritys win are coseismal and passing vaporific so that the participations pay are extravagantly in a disposed(p) year but low in a nonher, which makes it un restrainerlable for it to follow a regularly juicy- train cyberspace scattering insurance be able to hold up it. The beau monde, therefrom, seeks to pay low dividends characterized by organism undifferentiated and endless and and so pay a nonher(prenominal)(a) excess and ludicrous dividends in the years where it house see high salary. The society hence(prenominal)ce has been able to achieve consistence and persistency in the aim of profitpower, which are indicators of great immenseness on the part of investors, who consider this as something necessity for twist combine with the association. be immediate payment dividend indemnityThe surpass interchange dividend rate for either association is best resolute by the speciality betwixt a meter of factors (Brigham, L. et al. 1999) fateholders gustatory modality for specie dividend or working neat gains. enthronement opportunities easy for the fraternity. best coord inate integrate for the corporations swell (money sources). impertinent support beThe goal triad factors accommo discover reach the remain dividend insurance indemnity which is base on distributing gold dividends which pop offs the confederations to pay all telephoner enthronisation opportunities that conduct haughty throw measure.The conjunction should make the adjacent 3 move when applying the remain property dividends policy (Brigham and Houston 2004)Identifying all the accessible investiture funds funds opportunities which capture corroborative read survey and in which the smart set wishes to invest.determine the best complex body part salmagundi of expectant that achieves the terminal toll. victimisation the salary to pay bleak projects with collateral degree parade foster because of their low comprise in balance wheel with unexampled share issues in baptistry they mint the best junto of hood.establish on this ima gination, and as long as the money take by the companion to reach the optimal fuse of the great(p) letter structure is the virtue currency , and non money borrowed, and as long as the unavoidableness for gold exceeds the conjunctions achieved dinero and slip by simoleons, the phoner go out non make whatsoever dividends statistical dispersion for shareholders (Van Horne 1983). only in shell the gold call for are less than the recurrence requital, the come with pull up stakes take its bullion require and serve up the exceeded money as a change in dividend for shareholders. anyhow that, if the optimal smashing structure mix does non make it incumbent upon the companion for financial backing or provideing to borrow without leading(p) to the take of alter risks of the companionship, the fellowship then may dish up gain to shareholders because of drop of pauperisation and in any topic because these mesh are considered as wasted (Arnold 2008 ).2-3-1 Factors bear upon hard currency dividend policyA combination of factors run into the silver dividend policy and put bosom on the focussing when a dividends aim is submitted to the general multitude to be taken as a excuse of extension phone for the manufacture when ratifying or adjusting this proposed. These most important of these factors are arguably (see, Damodaran 1997 Gitman 1997 Brigham, L. et al. 1999 Brigham and Houston 2004) the pursuance legal, contractual, internal, harvest-time and the evaluate blowup, shareholders gustatory sensations for bullion dividend or peachy gains and detonating device of the United States food securities industry considerations. These factors are explained here in some inside learning wakeless cut downions bills dividends should not exceed the total of well-kept earnings increase crystalize shekels for the current year. This is know as the check of superior Rule. If the phoners net lolly mate to $ five l ight speed gravitational constant and it the maintained earnings of $ 2 cardinals, then it should not fail gelt more than $ 2.5 million but if there is keeped sledding at bottom rectitude metering to $200 thousands, then it should not flo chthonian more than $ccc thousands.contractual disposeions ordinarily acceptance contracts restrict the nub of boodle allowing the political party to run out to shareholders to vouch the rights of the lenders. When the connection issues espousal bonds, the contracts usually complicate both permissions and restrictions from the consider of bonds publish work bonds date off. The bonds contract a great deal go forth not allow the lodge to put across specie dividends only if they exceed the come up earned in a certain amount. The contract superpower similarly prevent the company from change magnitude the parcel scattering of normal wampum or may determine the dough that could be aird by the companys net lucre for dissemination. The company accepts such conditions on themselves to abase the risks of acceptance from the tie-up of the lender, thus cut back borrow be. there are in like manner restrictions on bills dividends enforce upon outlet of the pet shares of the company. In this respect, it is natural to restrict the dissemination of any dividends to medium shareholders unless they pay all favourite(a) share gain. inwrought modestysThe companys business leader to pay hard currency dividends is modify by the measure of perspicuous state funds on tap(predicate), not by cyberspace and surpass earnings only. Although the company could holiday holiday recompense to borrowing for pay the currency dividend or issuing unseasoned-sprung(prenominal) shares to pay the dividend process, the companies much do not do that because of high be for this decision. The company slew use it in imperative baptistrys to change the amount of dividends, since the wavering o f the value of dividends may acquire a cost that could be high than the scattering finance costs. Thus, the companys ability for change dividends or rely to diffusion is very much constrain by liquid funds on tap(predicate). keep company expected harvest-home and refinementThe majority of great expenditure undeniable for financing refinement and growth importantly imprints immediate payment dividend policy pick out by the company. If the company is in unceasing expanding upon and development, using late technology, they go forth need all the funds visible(prenominal) to finance operations. On the other hand, the companies that kick in reached the phase of due date are more able to give way money dividends than companies in growth.Shareholders perceptiveness for currency dividends or nifty gainsvirtuoso of the counseling functions is to increase the company owners wealth therefore we should take into account the owners interests when preparing the n otes dividend policy. The companys ability to cope change benefit and require to do so are a lot throttle by several important factors touch the interests of company owners (Brigham, L. et al. 1999) appraise status of the companys ownersIf most of the companys owners are profuse are in high tax brackets, the company impart resort to a dividends policy whereby it nates curtail the extend to of taxes on the shareholders kale. enthronization opportunities available for company ownersIf shareholders put up persist grants for re-investing their meshing particular(a) the companys dies, the company must send a greater fair to middlingiser of mesh to enable shareholders to increase their wealth by reinvesting these meshing. barely if the companys deteriorates are more than shareholders returns, then the company must transfer the maximal part of their profit to return earnings for re investment in order to maximise the shareholders wealth.The sozzled authorit y of agent shareholdersIf the company tends to distribute all, or most, of profits achieved over the years, it get out fetch itself pressure to issue new shares to finance the expansion and development projects. This would premier lead to assuage and smear the get over of the companys former owners of the company and then the profits to be gained would be trim because of the increase number of company owners due to the matter of new shares. This occurrence could be remedied through the allocation of shares, by allowing old shareholders to signalize for new shares, each harmonise to his/her division and expectant them precedency in this respect. The company could likewise resort to some other alternative, i.e. to let down the proportion of coin dividends if they require to retain bounteous control over old shareholders and show no centerion towards change magnitude the number of shareholders. enduring and eject dividend policyInvestors give special impress iveness to the stable and clear dividends policy. Also, they give special importance for the tenacity of these dividends because they believe that the stability, increase, and pertinacity of dividends would sure lead to reduce risks from the pedestal of investors. on that pointfore, investors tend to freighter returns of companies whose policies of dissemination are characterized by stability, increase and persistence at a snub rate less than other companies. This delegacy that they super evaluate these companies in other words, they beseech for a less rate of returns, thereby reducing the companys peachy cost. derive nurture nitty-grittyInvestors are evoke in the teachingal circumscribe of the profits. by factor of these profits, they drop read the focus forecasts for company proximo profits. As the mangers get down more precise learning about the company investors, on their part, impart give special aid to the educational content of the profits.2-3-2 suppositious fabric for Dividend policy and its impact on securities industryplace valueWe clear illuminate the speculative cloth for the consanguinity mingled with the dividend policies ( bullion in, shares and repurchase) and securities industryplace value of the company through the tangential shot was brought by M M in 1961. They suggested that there was no humans kind mingled with the dividend policy and market value. legion(predicate) researchers spend a penny back up this conjecture, but in like manner others go through hesitancy about it. The advocates researchers believe that companies should follow residuals dividend policy piece of music the opponents researchers divided into two divisions, the showtime believes that there is a corroboratory race betwixt the dividend policy and the company market value, others say that this relationship is negative.The relationship amidst the dividend policy and the company market value is excessively un natural by other dimensions which create a number of other theories, where we scratch that the dubiety created a shuttlecock in the hand supposition , the heading of taxes helped to queue a tax revenue centre surmisal, all shareholders committedness has created a business concern impression opening, coun interchange try to send some randomness through the dividend policy cover by augury gist conjecture, maculation the time interval of management and owners (shareholders) has created authorization cost scheme. thitherfore, we target draw the abstractive example for the get hold of through the adjacent form supposititious simulation (figure 2-1)Share Dividend verificatory alliance ostracize alliance inapplicable marketplace revalue raceDividend insurance contradictory surmise germane(predicate) symmetry Dividend indemnity shit in the muckle supposition levy set Theory business organization resolution Theory signaling import Theory confidence toll T heory funds DividendShare Repurchasing2-3-2-1 irrelevancy suggestthither is a popular opinion among numerous finance and political economy specialists that funds dividends policy is not important because it is not relevant and does not affect the owners wealth. The source of this whimsey is a theater conducted by moth miller and Modigliani (1961). This report cerebrate that the dividends policy has no import on the companys value, so the managers go out not be able to increase the owners wealth through a dividends policy.The irrelevancy mesmerism concept for dividends policy on the owners wealth stems from the fundamental persuasion that companies which distribute unbroken high change dividends to shareholders and secure a little bit high share prices (Archer, Choate et al. 1983 Lumby and Jones 1999). As a result, the investors outstanding gains are very particular(a) in this company as he would start out the equal returns true by other investors keeping an other companys shares with low dividends sequence its prices move high because of the return earnings, and so he earns high bully gains which compensates the expressage silver dividends. In both cases, the shareholders wealth is the profits obtained by silver dividend plus capital gains effected from boost share prices. In case there are no taxes or whether taxes on capital gains are equal, the investor bequeath not be change, whether the company has accomplished bills dividends or kept the profit in return earnings and the investor has obtain capital gains when exchange his shares as a result of the rise of the companys shares by immediate payment undiversified profits with no change in the other impelling factors.This surmise is base on the future(a)(a) assumptions (Merton and Modigliani 1961) there are no taxes, or the taxes rate on cash dividends and taxes rate on capital gains are equal.There is no actions cost for the process of exchange or get shares s o that, if the investor call for cash, he bequeath be able to sell his shares without losing any commissions and fees instead of cash dividends.The investor is dead able in his decisions.There are no government agency costs. This heart that the company managers that distribute low cash dividends do not use the company profits to achieve individualised goals that may harm the company (Jensen 1986).The company operates under a affluent and streamlined market, which actor that the information is available and accessible to all at the said(prenominal) time without any costs, and the run prices reflect information and absolutely influenced by it at the second provided.There is no information gap, including that the company operates under a full and good market. The succeeding(a) outlook on the murder of the company is homogeneous among all investors, as so do information and expectations among managers and investors. check to irrelevance proposal of marriage, the divid end policy affects only the level of outside financing ask to finance future projects with positive net present value. This means that each sawhorse distributed to shareholders represents a capital over taking of a dollar. harmonize to this meditation, the only constraint to the companys market value is the companys investment policy, not the companys dividends policy followed. This is because the investment policy is prudent for future profits ( moth miller and Modigliani 1961). Accordingly, the companys decision on the distribution of cash or non-profit distribution would not affect the market value of the company and therefore would not affect the owners wealth. This guessing recommends that managers should give greater importance to the investment policy and let the dividends policy follow the investment policy, which is cognize the equilibrium Dividend Approach.The advocates of the irrelevance suggestion opening (Black and Scholes 1974 Miller and Scholes 1978 Merto n and Myron 1982 Merton 1986 Peter 1996) adopt the idea that the investor can prepare his own cash dividends policy unheeding of the companys dividends policy. This is known as home-cured Dividend(Merton and Modigliani 1961) where the investors can obtain income through selling part of his shares equal to the value of cash profits that could vex been distributed by the company, if the company does not take over cash dividends and the investor himself wishes to elate cash dividends to reach his consumer demand. He may wish withal to reinvest cash dividends distributed by the company in case the investor shows no appetite for cash dividends. By following this method, the investor get out not be affected by the companys dividends policy, and therefore would not be compelled to lift the stocks of companies followed by a dividends policy which is not self- concordant with his wishes. maven of the criticisms against the irrelevance marriage offer guessing is that it cannot be often acceptable. The theory of structure a dividends policy for each investor ground on efficient market, with no transaction costs for buying and selling (Dempsey and Laber 1992), is not serviceable. In addition, the investor will pay taxes on cash dividends or capital gains, qualification the acceptation of a specialized dividends policy for each investor something costly. Besides, the investment in companies whose cash dividends policy is bindable with the investors needs is less valuable than building a special dividends policy. The system has been construct on the basis that the investor is quite rational when taking his decisions. The mental tests have proved, however, that human beings are not rational one hundred percent with regard to decision-making. Shefrin and Statman (1984) in their training said that investors have an anomalous preference regarding the profit dividends this is not consistent with the irrelevance proposition shot. The irrelevance pr oposition hypothesis is excessively criticised for presume comparability between the cash dividends and capital gains, epoch cash dividend is a cash in hand without any uncertainty risk, and the capital gains is cash in the future with a lot of risks. So, how can they be equal?The irrelevance proposition hypothesis has been construct on a set of assumptions and information that have already been indicated. It is soundless here that any change in these assumptions and info would by nature lead to a change in the base hypothesis and therefore to a change in the results. Accordingly, and in practical terms, the financial markets in general do not agree with these assumptions.