IDEAS home Printed from https://ideas.repec.org/p/par/dipeco/2011-ep03.html
   My bibliography  Save this paper

Dividends, sustainability and relevance

Author

Listed:
  • A. Mantovi

    ()

Abstract

Sustainability 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.

Suggested Citation

  • A. Mantovi, 2011. "Dividends, sustainability and relevance," Economics Department Working Papers 2011-EP03, Department of Economics, Parma University (Italy).
  • Handle: RePEc:par:dipeco:2011-ep03
    as

    Download full text from publisher

    File URL: http://swrwebeco.econ.unipr.it/RePEc/pdf/I_2011-03.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Skinner, Douglas J., 2008. "The evolving relation between earnings, dividends, and stock repurchases," Journal of Financial Economics, Elsevier, vol. 87(3), pages 582-609, March.
    2. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    3. Feichtinger, G. & Hartl, R.F. & Kort, P.M. & Yegorov, Y.A., 2007. "A new solution property in optimal control : The lens," Other publications TiSEM c80d5d10-2f54-4c43-a949-7, Tilburg University, School of Economics and Management.
    4. Stewart C. Myers, 2001. "Capital Structure," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 81-102, Spring.
    5. Brav, Alon & Graham, John R. & Harvey, Campbell R. & Michaely, Roni, 2005. "Payout policy in the 21st century," Journal of Financial Economics, Elsevier, vol. 77(3), pages 483-527, September.
    6. Dorfman, Robert, 1969. "An Economic Interpretation of Optimal Control Theory," American Economic Review, American Economic Association, vol. 59(5), pages 817-831, December.
    7. Amy Dittmar, 2008. "Corporate Cash Policy and How to Manage it with Stock Repurchases," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(3), pages 22-34.
    8. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411-411.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Optimal control. Shadow prices. Scale effects. Modigliani-Miller irrelevance;

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:par:dipeco:2011-ep03. 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: (Andrea Lasagni) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/feparit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.