Which dividend policy theory, proposed by Miller and Modigliani, argues that dividend policy has no impact on stock price or cost of capital?

Explanation

* Miller and Modigliani’s Dividend Irrelevance Theory posits that under perfect market assumptions, dividend policy does not affect firm value.
* Stock value depends on earning power and asset risk, not whether earnings are distributed or retained.
* Imperfections like taxes and transaction costs create real-world deviations.