Bird In Hand

外汇网2021-06-19 14:05:52 125

A theory that postulates that investors pfer pidends from a stock to potential capital gains because of the inherent uncertainty of the latter. Based on the adage that a bird in the hand is worth two in the bush, the bird-in-hand theory states that investors pfer the certainty of pidend payments to the possibility of substantially higher future capital gains.

Taobiz explains Bird In Hand

The theory was developed by Myron Gordon and John Lintner as a counterpoint to the Modigliani-Miller pidend irrelevance theory, which maintains that investors are indifferent to whether their returns from holding a stock arise from pidends or capital gains. Under the bird-in-hand theory, stocks with high pidend payouts are sought by investors and consequently command a higher market price.

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