What are the dividend correlation theories in dividend distribution theory?

(1) "bird in the hand" theory: This theory holds that the company's dividend policy is closely related to the company's share price, that is, when the company pays a higher dividend, the company's share price will rise accordingly and the company's value will be improved.

(2) Signal transmission theory: This theory holds that under the condition of asymmetric information, companies can transmit information about their future profitability to the market through dividend policy, thus affecting the company's share price. Generally speaking, companies with strong profitability in the future are often willing to distinguish themselves from companies with poor profitability through relatively high dividend payment levels in order to attract more investors.

(3) Income tax difference theory: This theory holds that due to the difference of tax rate and tax payment time, capital gains are more conducive to achieving the goal of maximizing income than dividend income, and companies should adopt a low dividend policy.

(4) Agency theory: This theory holds that dividend payment can effectively reduce agency costs. High-level dividend policy reduces the agency cost of enterprises, but at the same time increases the external financing cost. The ideal dividend policy should minimize the sum of the two costs.