https://isiarticles.com/bundles/Article/pre/pdf/29245.pdf

In search of a residual dividend policy

https://scholarworks.uno.edu/cgi/viewcontent.cgi?article=1047&context=econ_wp

How Norwegian managers view dividend policy

While losses were accumulating during the 2007-09 financial crisis, many banks continued to maintain a relatively smooth dividend policy. We present a model that explains this behavior in a setting where there are financial externalities across banks. In particular, by paying out dividends, a bank transfers value to its shareholders away from its creditors, who in turn are other banks. This way, one bank's dividend payout policy a ects the equity value and risk of default of otther banks. When such negative externalities are strong and bank franchise values are not too low, the private equilibrium can feature excess dividends relative to a coordinated policy that maximizes the combined equity value of banks.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2838298_code1109023.pdf?abstractid=2838298&mirid=1&type=2

Bank Capital and Dividend Externalities

Impact of dividend policy on shareholders' value: a study of Indian firms

Dividend is the return that a shareholder gets from a company, out of its profits, on his shareholding. Equity investors receive returns in two forms—dividends and capital gains. The factors that d...

Determinants of Corporate Dividend Policy: A Tobit Model Approach:

Common stock theory proponents maintain that the safety and total return from dividends and capital gains of common stock will exceed bond return over the long term Common stocks are able to sustain purchasing power more effectively than bonds because as commodity prices increase, purchasing power decreases and the bond income and par value returned upon maturity become less valuable Investors are willing to pay increased price premiums for issues with consistent dividend growth because received cash dividends are less risky than future capital gains or higher expected dividend payments If the firm's opportunity rate is higher than that of the investors', the firm should retain 100% of its earnings If the investors' opportunity rate is higher than the firm's, 100% of earnings should be paid out as dividends If the two rates are equal, as in the case of perfect capital markets, than the dividend payout ratio is of no consequence

Early Academic Thinking and Research

This chapter focuses on the emergence of dividend payment patterns and trends throughout the history of the modern corporation. Corporate dividend payments to shareholders began more than 300 years ago and have continued as an acceptable, if not required, activity of corporate managers, despite the apparent contradictory economic nature of these payments. It seems that the corporation progressed from its original liquidating dividend, to distribution of all profits, to a token dividend payment, the size and frequency of which are left to the discretion of management. The lack of financial information available to investors in the late 19th and early 20th centuries magnified the importance of a history of consistent dividend payments. Shareholders and analysts often used this information as their primary input when valuing firms. The major promoters of the notion that dividends are good for the shareholders are financial analysts and other financial mavens. The chapter also focuses on the emergence of dividend reinvestment plans (DRIPs) which is one of the most fascinating developments regarding dividend-paying patterns.

200 Years of Dividend Practices

This chapter focuses on dividend policy of regulated industries, measuring dividend policy based on dividend payout ratio and yield. Regardless of the rationale for dividend payment, it is generally recognized that fundamental differences exist in the dividend policies of unregulated and regulated firms. A reason for this difference in dividend policy is that historically the investment opportunity set available to regulated firms has been restricted, and these restrictions have limited the capital gains potential from equity investments in regulated firms. Unregulated firms pay out a substantially smaller portion of their earnings than do most regulated industries, especially utilities and Real Estate Investment Trusts (REITs), and the dividend yield of unregulated firms is significantly smaller than the corresponding yield of most regulated firms, with insurance companies being an exception. The tax liability associated with the receipt of dividends as ordinary income, plus the flotation costs associated with new issues, would have to be less than the net transactions cost of receiving the income as capital gains.

Dividend Policy of Regulated Industries

This chapter focuses on the features of dividend reinvestment plans (DRIPs), which have their roots in the late 1920s. About more than 1500 firms with DRIPs, representing all walks of life in corporate America, are listed on the internet. In practicality, the DRIP allows small investors to use dollar averaging, bypassing the broker and saving on possibly high brokerage fees. DRIP allows bondholders and preferred stockholders to reinvest coupon payments and preferred dividends in the firm's stock and permit customers of the business to contribute through billing systems and savings accounts. DRIP provides safekeeping facilities for stockholders who want to leave their shares with the plan administrator. The most obvious disadvantage of the DRIP from the shareholder's point of view is the tax aspect. Taxes must be paid, out of pocket, for the reinvested dividends, and records must be kept concerning the timing and purchase price of the shares.

Dividend Reinvestment Plans: A Puzzle within the Puzzle

This chapter discusses various methods adopted by firms for distributing dividends to shareholders. Both stock dividends and stock splits involve the distribution of additional shares of stock to the existing shareholders in proportion to their ownership. The accounting profession recommends treating stock distributions of greater than 20–25% as stock splits. A more recent mode of investigation of the stock dividend/split phenomenon is the application of some aspects of the blossoming literature of market microstructure and the bid–ask spread. Keeping the stock price within a range management perceives as optimal both for the purpose of liquidity and for making the ownership structure as diffuse as the stewards of the firm think to be optimal is another favorite explanation of the motives for stock dividends/splits. The initial appearance of the responses from firms that did not pay a stock dividend in the period is that perceptions of these executives are similar to those for the primary sample, particularly for the statements receiving the greatest agreement.

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