THE STOCK DIVIDEND DECISION

Dividend Behavior for the Aggregate Stock Market

We develop and estimate a model of the dynamic behavior of aggregate corporate dividends as a function of the change in permanent earnings of firms. Although structured along the lines of the Lintner-Brittain-FamaBabiak models of individual-firm dividend behavior, the model uses changes in stock prices instead of accounting earnings to measure permanent earnings changes. The performance of the ...

Dividend Variability and Stock Market Swings

This paper examines the extent to which swings in stock prices can be related to variations in the discounted value of expected future dividends when investors face uncertainty about their future behavior. I develop an econometric model that accounts for the instability of U.S. dividend growth and discount rates during the past 120 years. Estimates of the model reveal that changing forecasts of...

Dividend Resumptions, Future Profitability and Stock Returns

We present a new approach to examining the dividend signalling hypothesis by investigating dividend resumptions by former payers. Evidence regarding the signalling hypothesis has been mixed to date. In support of previous work, we find that dividend policy is sticky, whereby the achievement of profitability does not necessarily lead to the resumption of dividend payment. We find no evidence of ...

Stock Price Sensitivity to Dividend Changes

This paper examines the stock price sensitivity to dividend changes. The Dividend Signaling, the Free-Cash-Flow, the Maturity and the Catering Hypotheses all predict an average positive (negative) reaction to announcement of a dividend increase (decrease). However, these hypotheses have different cross-sectional predictions. This paper documents that the positive stock price response to dividen...

How dividend announcements affect stock prices