Homework answers / question archive / Milton Friedman's philosophy (Nobel prize winning economist) Firms should only retain earnings to extent they can invest in projects with as high of a return as investors could earn investing in other firms with similar risk profiles Paying dividends reduces each share's value by the dividend amount

Milton Friedman's philosophy (Nobel prize winning economist) Firms should only retain earnings to extent they can invest in projects with as high of a return as investors could earn investing in other firms with similar risk profiles Paying dividends reduces each share's value by the dividend amount

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Milton Friedman's philosophy (Nobel prize winning economist) Firms should only retain earnings to extent they can invest in projects with as high of a return as investors could earn investing in other firms with similar risk profiles Paying dividends reduces each share's value by the dividend amount. If the firm chooses not to pay dividends, investors who want dividends can sell their shares to realize income not supplied by dividends