Recently, applications of cooperative game theory to economic allocation problems have gained popularity. In many such allocation problems, such as river games, queueing games and auction games, the game is totally positive (i.e., all dividends are nonnegative), and there is some hierarchical ordering of the players. In this paper we introduce the Restricted Core for such games with ordered pla...

China’s state-owned enterprises (SOEs) overseen by the central government’s StateOwned Assets Supervision and Administration Commission (SASAC) made net profits of RMB 299 billion during the first half of 2005 and RMB 400 billion in 2004. All nonfinancial SOEs, including those administered by provincial and municipal authorities, earned total profits of RMB 759 billion in 2003, representing 6.5...

Dividends are taxed at both the corporate and personal levels in the United States. This double taxation of dividends may distort investment efficiency. Partly motivated by this consideration, the US Congress enacted the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) in 2003. This act reduced the tax rates on dividends and capital gains, and eliminated the wedge between these two tax ra...

This study investigates the market reaction to dividend change announcements at the Istanbul Stock Exchange. A sample of 184 announcements made by 46 companies during the period 2005 to 2008 is analyzed by using the event study methodology. The results suggest that the market reacts positively to dividend increases, negatively to dividend decreases and does not react when dividends are not chan...

There are two common methods for pricing European call options on a stock with known dividends. The market practice is to use the Black-Scholes formula with the stock price reduced by the present value of the dividends. An alternative approach is to increase the strike price with the dividends compounded to expiry at the risk-free rate. These methods correspond to different stock price models a...

We compute the value of a firm that pays its cash flows each period through share repurchases in a dynamic environment where personal taxes are paid on realized capital gains and dividends. These results provide a measure of the personal tax advantages of equity financing relative to debt financing, which are often cited as increasing the cost of debt. The initial price of the firm depends on t...

We study the dynamic general equilibrium of an economy where risk averse shareholders delegate the management of the firm to risk averse managers. The optimal contract has two main components: an incentive component corresponding to a non-tradable equity position and a variable ’salary’ component indexed to the aggregate wage bill and to aggregate dividends. Tying a manager’s compensation to th...

Financial regulation imposes equity buffers on banks by restricting dividends. This paper studies constrained-efficient dividend policy when fund loans with and debt. In the model, bank shareholders consider costly a bank’s access to debt depends its shareholder value. response loan losses cut dividends, but eventually defer dividends too much. They do not internalize that commitment higher (an...