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An empirical examination of the price-dividend relation with dividend management

  • Lucy F. Ackert
  • William C. Hunter

Some recent empirical evidence suggests that stock prices are not properly modelled as the present discounted value of expected dividends. In this paper we estimate a present value model of stock price that is capable of explaining the observed long-term trends in stock prices. The model recognizes that firm managers control cash dividend payments. The model estimates indicate that stock price movements may be explained by managerial behavior.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-00-22.

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Date of creation: 2000
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Handle: RePEc:fip:fedhwp:wp-00-22
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