Finding dividend policy

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My boss studied a sample of firms that either paid their first ever cash dividend or initiated a dividend after a 10 year period of no dividends. An associate found stock prices to fall when dividends are. How would these positive and negative stock price results fit with the dividend irrelevance argument of MM and the opposing effects of taxes and current income needs on stock prices, if future earnings are held constant.

Reference no: EM1337713

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