A discrete choice model of dividend reinvestment plans: classification and prediction
AbstractWe use a discrete choice recursive model to classify companies with and without dividend reinvestment plans (DRIPs). Our model classifies 72.0% of companies correctly. We interpret misclassified companies as being likely to switch their plan status. For example, if financial data erroneously suggest that a company should have a DRIP then we expect that it would be more likely to institute a plan than other companies in the sample. Our results support this conjecture. Companies that add DRIPs tend to have more extreme levels of variables that control for management entrenchment, higher levels of variables that control for the ability to pay dividends and higher payout ratios. Copyright (C) 2011 John Wiley & Sons, Ltd.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.
Volume (Year): 32 (2011)
Issue (Month): 4 (June)
Contact details of provider:
Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976
Other versions of this item:
- Thomas P. Boehm & Ramon P. DeGennaro, 2007. "A discrete choice model of dividend reinvestment plans: classification and prediction," Working Paper, Federal Reserve Bank of Atlanta 2007-22, Federal Reserve Bank of Atlanta.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dammon, Robert M & Spatt, Chester S, 1992. " An Option-Theoretic Approach to the Valuation of Dividend Reinvestment and Voluntary Purchase Plans," Journal of Finance, American Finance Association, American Finance Association, vol. 47(1), pages 331-47, March.
- Sherrill Shaffer, 1990.
"Aggregate deposit insurance funding and taxpayer bailouts,"
90-14, Federal Reserve Bank of Philadelphia.
- Shaffer, Sherrill, 1991. "Aggregate deposit insurance funding and taxpayer bailouts," Journal of Banking & Finance, Elsevier, Elsevier, vol. 15(4-5), pages 1019-1037, September.
- Peterson, Pamela P & Peterson, David R & Moore, Norman H, 1987. "The Adoption of New-Issue Dividend Reinvestment Plans and Shareholder Wealth," The Financial Review, Eastern Finance Association, Eastern Finance Association, vol. 22(2), pages 221-32, May.
- Scholes, Myron S. & Wolfson, Mark A., 1989.
"Decentralized investment banking : The case of discount dividend-reinvestment and stock-purchase plans,"
Journal of Financial Economics, Elsevier,
Elsevier, vol. 24(1), pages 7-35, September.
- Myron S. Scholes & Mark A. Wolfson, 1989. "Decentralized Investment Banking: The Case of Discount Dividend-Reinve stment and Stock-Purchase Plans," NBER Working Papers 3093, National Bureau of Economic Research, Inc.
- Smith, C.W. & Watts, R.L., 1992.
"The Investment Oppotunity set and Corporate Financing, Dividend and Compensation Policies,"
Papers, Rochester, Business - Financial Research and Policy Studies
92-02, Rochester, Business - Financial Research and Policy Studies.
- Smith, Clifford Jr. & Watts, Ross L., 1992. "The investment opportunity set and corporate financing, dividend, and compensation policies," Journal of Financial Economics, Elsevier, Elsevier, vol. 32(3), pages 263-292, December.
- Calhoun, Charles A & Deng, Yongheng, 2002. "A Dynamic Analysis of Fixed- and Adjustable-Rate Mortgage Terminations," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 24(1-2), pages 9-33, Jan.-Marc.
- Ryngaert, Michael, 1988. "The effect of poison pill securities on shareholder wealth," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 377-417, January.
- Todd, Janet M. & Domian, Dale L., 1997. "Participation rates of dividend reinvestment plans: Differences between utility and nonutility firms," Review of Financial Economics, Elsevier, Elsevier, vol. 6(2), pages 121-135.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.