Dividend Policy and Reputation

Gillet, Roland; Lapointe, Marc-André; Raimbourg, Philippe

doi:10.1111/j.1468-5957.2008.02074.x

Cited by 16 publications

(16 citation statements)

References 25 publications

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“… Rozeff (1982),Eades (1982),Baskin (1989),Gillet et al (2008),Carter and Schmidt (2008), and many others, present similar results regarding the dividend-risk relationship.…”

mentioning

confidence: 63%

Dividend growth, stock valuation, and long-run risk

Bergeron

2011

J Econ Finan

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In this paper, we integrate the long-run concept of risk into the stock valuation process. We use the intertemporal consumption capital asset pricing model to demonstrate that a stock's long-run dividend growth is negatively related to its current dividend-price ratio and positively related to its long-run covariance between dividends and consumption. Then, we show that the equilibrium price of a stock is determined by its current dividend, long-run dividend growth, and longrun risk. In all, our work suggests that risk cumulated over many periods represents an important parameter in assessing the theoretical value of a firm.

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“… Rozeff (1982),Eades (1982),Baskin (1989),Gillet et al (2008),Carter and Schmidt (2008), and many others, present similar results regarding the dividend-risk relationship.…”

mentioning

confidence: 63%

Dividend growth, stock valuation, and long-run risk

Bergeron

2011

J Econ Finan

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“…Yilmaz and Gulay (2006) found in their study that ''prices start to rise a few sessions before cash dividend payments; and on the ex-dividend day; they fall less than do dividend payments; finally decreasing in the sessions following the payment; trading volume shows a considerable upward shift before the payment date; is stable after, therefore, cash dividends influence prices and trading volumes in different ways before, at, and after payment, providing some profitable active trading strategy opportunities around the ex-dividend day''. Gillet, Lapointe and Raimbourg (2008) claimed that the signalling equilibrium becomes unbalanced, originating any dividend signalling policy to become difficult to implement. Dhanani (2005) argued that the research results sustain dividend proposition related to signalling and ownership structure, in liking to those about capital structure and investment decisions and agency issues.…”

Section: IImentioning

confidence: 99%

Dividend Policy: A Comparative Study of UK and Bangladesh Based Companies

Alam¹,

Hossain²

2012

IOSRJBM

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“…There is also a literature that studies the market reactions on the reputation built by dividend payout policy of firms. The models of Gillet, Lapointe, and Raimbourg (2008) suggest that firm managers who decide to signal the quality of their projects via a dividend policy establish a stable dividend policy when the information they hold is favorable. Furthermore, their models imply that investors would respond favorably to the increase of dividend yields by the firms that have established a dividend reputation.…”

Section: Introductionmentioning

confidence: 99%

Dividend Yields, Stock Returns and Reputation

Kang

Kim

2019

JOFRP

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Accepted:Problem/ Relevance -The relationship between dividend yields and stock returns is an unresolved issue in finance. Previous papers show mixed results on the relationship. To clarify the relationship, we consider dividend reputation. We investigate whether dividend reputation plays a role in explaining the relationship between dividend yields and stock returns.Research Objective/ Questions -We hypothesize that firms with dividend reputation tend to have less risk compared to firms without dividend reputation, and the expected return of firms with dividend reputation will be lower given the dividend yield, which is called the "reputation effect." A mix of firms with and without dividend reputation in a sample could distort the relationship between stock returns and dividend yields. We group stocks according to reputation and analyze the relationship between dividend yields and stock returns.Methodology -We construct our sample from all firms listed on the NYSE, AMEX, and NASDAQ stock exchanges. In our analysis, reputation effects are included to analyze the relationship between dividend yields and stock returns. We divide our sample firms into three groups according to the track record of dividend payments to control for reputation effects: (1) reputation-established firms, (2) reputation-building initiation, and (3) no reputation firms. To test the hypotheses, we run the panel regression with reputation variables and the control variables.Major Findings -We find that the reputation effect is strongest for reputation-established firms and a weaker reputation effect for reputation-building younger firms. After controlling the reputation effect and other relevant variables, we find that there does exist a significantly positive relationship between dividend yields and stock returns.Implications -The empirical results show that the reputation effect is higher for established firms with a good track record of dividend payments than for firms with a short history of dividend payments or for firms with an unreliable history of dividend payments. After controlling the reputation effect and other relevant variables, we find there exists a significantly positive relationship between dividend yields and stock returns. We also find that one year is not enough time for firms to build a dividend reputation.

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Dividend Policy and Reputation

Cited by 16 publications

References 25 publications

Dividend growth, stock valuation, and long-run risk

Dividend growth, stock valuation, and long-run risk

Dividend Policy: A Comparative Study of UK and Bangladesh Based Companies

Dividend Yields, Stock Returns and Reputation

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