A discrete choice model of dividend reinvestment plans: classification and prediction
We 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.
Volume (Year): 32 (2011)
Issue (Month): 4 (June)
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976|
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.:
- 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, vol. 22(2), pages 221-232, May.
- Shaffer, Sherrill, 1991.
"Aggregate deposit insurance funding and taxpayer bailouts,"
Journal of Banking & Finance,
Elsevier, vol. 15(4-5), pages 1019-1037, September.
- Sherrill Shaffer, 1990. "Aggregate deposit insurance funding and taxpayer bailouts," Working Papers 90-14, Federal Reserve Bank of Philadelphia.
- Smith, Clifford Jr. & Watts, Ross L., 1992. "The investment opportunity set and corporate financing, dividend, and compensation policies," Journal of Financial Economics, Elsevier, vol. 32(3), pages 263-292, December.
- Smith, C.W. & Watts, R.L., 1992. "The Investment Oppotunity set and Corporate Financing, Dividend and Compensation Policies," Papers 92-02, Rochester, Business - Financial Research and Policy Studies.
- 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, vol. 47(1), pages 331-347, March.
- 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, 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.
- Todd, Janet M. & Domian, Dale L., 1997. "Participation rates of dividend reinvestment plans: Differences between utility and nonutility firms," Review of Financial Economics, Elsevier, vol. 6(2), pages 121-135.
- Ryngaert, Michael, 1988. "The effect of poison pill securities on shareholder wealth," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 377-417, January.
- 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, vol. 24(1-2), pages 9-33, Jan.-Marc. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:32:y:2011:i:4:p:215-229. See general information about how to correct material in RePEc.
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.