Implications for Corporate Policy Establish a policy that will maximize shareholder wealth Distribute excess funds to shareholders and stabilize the absolute amount of dividends if necessary (passive) Payouts greater than excess funds should occur only in an environment that has a net preference for dividends 18-1118-11 Implications for Corporate Policy Establish a policy that will maximize shareholder wealth. Distribute excess funds to shareholders and stabilize the absolute amount of dividends if necessary (passive). Payouts greater than excess funds should occur only in an environment that has a net preference for dividends