Corporate payout policy is just a special case of financial policy so why should it matter?

Remember:

If:

• financial policy affects firm value

Then it must be because at least one of the following is true:

• financial policy affects a firm's tax obligation
• financial policy affects contracting costs
• financial policy affects real investment policy

So, if corporate payout policy matters, it must be because it affects either a firm's tax obligation, its contracting costs, or its real investment policy (or some combination thereof).