Abstract
Miller and Modigliani (Citation1961) show the circumstances under which dividend policy does not affect the value of the firm. The debate over the impact of dividend policy on the value of the firm continues to this day. This study shows that an investor can create any pattern of dividends desired regardless of the dividend pattern paid by the company. That is, the investor can convert any existing dividend stream into any desired consumption pattern, in the presence of Miller and Modigliani (M&M) assumed financial markets. Thus, the value of the firm is not determined by the pattern of the dividend stream but by the present value of the future dividends, regardless of the pattern. Any pattern of dividend payments that the firm adopts can be changed by the investor to any other pattern. Thus, the M&M dividend irrelevance argument can be demonstrated using this simple approach.