Corporate dividend policy and the partial adjustment model

Bond, Michael T.; Mougoué, Mbodja

doi:10.1016/0148-6195(91)90016-p

Cited by 12 publications

(6 citation statements)

References 14 publications

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“…Given the implications of monetary policy restrictions on the availability of funds to meet firm's requirements, we expand the Lintner framework to examine the impact of these restrictions on the dividend policy of companies. Bond and Mogoue’ (1991) cast doubt on the ability of the Lintner's partial adjustment model in characterising dividend policy. They show that high degrees of correlation between the independent variables of the partial adjustment model may render the empirical results … useless.…”

Section: Model and Methodologymentioning

confidence: 99%

“…Further, they conclude “that autocorrelated earnings of firms result in an infinite number of pairs of speeds of adjustment and target payout rates that give identical dividend payout streams”. Thus, Lintner's partial adjustment model might not “generate unique measures of the dividend policy of the individual firm” (Bond and Mogoue’, 1991, p. 177). In spite of these findings, researchers have used Lintner's model for analyzing the corporate dividend behaviour.…”

Section: Model and Methodologymentioning

confidence: 99%

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Dividend behaviour of Indian companies under monetary policy restrictions

Pandey

Bhat²

2007

Managerial Finance

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In this study we examine the dividend behaviour of Indian companies. We use GMM estimator, which is the most suitable methodology in a dynamic setting. Our results show that the Indian firms have lower target ratios and higher adjustment factors. The most significant result is that the restricted monetary policies have significant influence on the dividend behaviour of Indian firms, causing about 5-6 percent reduction in the payout ratios. The significance of macro economic policy variable suggest that monetary policy restrictions do have impact on cost of raising funds, and the information asymmetry between lenders and borrowers increases that forces companies to reduce their dividend payout.

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Section: Model and Methodologymentioning

confidence: 99%

Section: Model and Methodologymentioning

confidence: 99%

Dividend behaviour of Indian companies under monetary policy restrictions

Pandey

Bhat²

2007

Managerial Finance

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“…Others have questioned the efficacy of mathematical models in explaining the dividend policies of individual firms. For example, Bond and Mougoue (1991) conducted empirical tests to see if the target dividend payout rates and the speed of adjustment implied in Lintner's (1 956) behavioral model accurately characterized firms' dividend policies. They concluded that the partial-adjustment model does not reflect the unique dividend policies of individual firms.…”

Section: Literature Reviewmentioning

confidence: 99%

Factors Influencing Dividend Policy Decisions of Nasdaq Firms

Baker

Veit

Powell

2001

The Financial Review

153

147

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This study reports the results of a 1999 survey of Nasdaq-listed firms. Respondents provided information about the importance of 22 different factors that influence their dividend policy. Our results suggest that many managers of Nasdaq firms make dividend decisions consistent with Lintner's (1956) survey results and model. The results also show significant differences between the manager responses of financial and non-financial firms on nine of the 22 factors. This finding implies the presence of industry effects on dividend policy decisions. In general, the same factors that are important to Nasdaq firms are also important to NYSE firms.

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“…Over the years, dividends are increased slowly at a particular speed of adjustment, so that the actual payout ratio moves closer to the target payout ratio. Bond and Mougoue (1991) reexamine the partial adjustment model of dividend payment suggested by Lintner. They find that when earnings follow a linear autoregressive process, then there are many combinations of target payout rate and the speed of adjustment that would fit the same earnings stream and dividend stream.…”

Section: Introductionmentioning

confidence: 99%

Dividend policy: a review

Bhattacharyya

2007

Managerial Finance

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Purpose -This paper aims to briefly review principal theories of dividend policy and to summarize empirical evidences on these theories. Design/methodology/approach -Major theoretical and empirical papers on dividend policy are identified and reviewed. Findings -It is found that the famous dividend puzzle is still unsolved. Empirical evidence is equivocal and the search for new explanation for dividends continues. Also a number of stylized empirical facts about dividends discovered by researchers are noted. Research limitations/implications -As with any review paper, the major limitation is that necessarily some papers will be left out. Also as newer research is published the review paper will become more dated. Originality/value -This paper will give the reader a comprehensive understanding of the dividend puzzle and the major paradigms of dividend policy. The paper will also give the reader the major stylized facts about dividend policy.

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Corporate dividend policy and the partial adjustment model

Cited by 12 publications

References 14 publications

Dividend behaviour of Indian companies under monetary policy restrictions

Dividend behaviour of Indian companies under monetary policy restrictions

Factors Influencing Dividend Policy Decisions of Nasdaq Firms

Dividend policy: a review

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