Dividends, sustainability and relevance
AbstractSustainability and relevance of dividend policies are addressed in terms of an optimal control model set forth by Feichtinger et al. (2007), by means of which two different capitalization measures,accounting for dividends and capital gains, can be given explicit representation. In the light of the theory of capital tailored by Dorfman (1969), an intertemporal economic measure of shareholder value is introduced, together with the associated shadow price. Relevant tradeoffs and scale effects are thoroughly discussed, in connection with the Modigliani-Miller irrelevance framework. The ‘lens’ property of the model is interpreted as a benchmark property of payout policies.
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Bibliographic InfoPaper provided by Department of Economics, Parma University (Italy) in its series Economics Department Working Papers with number 2011-EP03.
Date of creation: 2011
Date of revision:
Optimal control. Shadow prices. Scale effects. Modigliani-Miller irrelevance;
Find related papers by JEL classification:
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-09 (All new papers)
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