IDEAS home Printed from https://ideas.repec.org/p/uta/papers/2014_03.html

An Economic Perspective (Model) on US Corporations and Treasury Stock

Author

Listed:
  • James P. Gander

Abstract

Treasury stock and firm market value using a modified TobinÂ’s q are modeled by using a firm utility preference function and a quadratic constraint function. The choice of the quadratic form is based on an econometric analysis of the relationship of q to T, the amount of treasury stock held by the firm. US industrial corporations were sampled for the quarterly period from 1969 to 2013. There are 1,041 panels (firms) and some 32,494 overall observations. The statistical results were quite good. The firmÂ’s optimum solution resulted in a q that is less than the maximum q given by the inverted U-shaped constraint. I argue that stockholders would prefer the maximum q.

Suggested Citation

  • James P. Gander, 2014. "An Economic Perspective (Model) on US Corporations and Treasury Stock," Working Paper Series, Department of Economics, University of Utah 2014_03, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2014_03
    as

    Download full text from publisher

    File URL: http://economics.utah.edu/research/publications/2014_03.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Eugene F. Fama & Kenneth R. French, 2001. "Disappearing Dividends: Changing Firm Characteristics Or Lower Propensity To Pay?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(1), pages 67-79, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2014. "Does local financial development matter for firm lifecycle in India ?," Policy Research Working Paper Series 7008, The World Bank.
    2. Gambacorta, Leonardo & Oliviero, Tommaso & Shin, Hyun Song, 2020. "Low price-to-book ratios and bank dividend payout policies," CEPR Discussion Papers 15615, Centre for Economic Policy Research.
    3. Paul B. McGuinness, 2024. "Research note: An investigation of the relation between pre-IPO dividends and vendor sales," Review of Quantitative Finance and Accounting, Springer, vol. 62(3), pages 889-910, April.
    4. Pantelis Longinidis & Panagiotis Symeonidis, 2013. "Corporate Dividend Policy Determinants: Intelligent Versus A Traditional Approach," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 20(2), pages 111-139, April.
    5. Thomas McCluskey & Aoife Broderick & Amanda Boyle & Bruce Burton & David Power, 2010. "Evidence on Irish financial analysts' and fund managers' views about dividends," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 2(2), pages 80-99, June.
    6. Custódio, Cláudia & Ferreira, Miguel A. & Laureano, Luís, 2013. "Why are US firms using more short-term debt?," Journal of Financial Economics, Elsevier, vol. 108(1), pages 182-212.
    7. Renneboog, L.D.R. & Szilagyi, P.G., 2009. "Shareholder Activism through the Proxy Process," Other publications TiSEM cc25d736-2965-4511-b100-1, Tilburg University, School of Economics and Management.
    8. Bo Becker & Zoran Ivković & Scott Weisbenner, 2011. "Local Dividend Clienteles," Journal of Finance, American Finance Association, vol. 66(2), pages 655-683, April.
    9. Paul Tanyi & David B. Smith & Xiaoyan Cheng, 2021. "Does firm payout policy affect shareholders’ dissatisfaction with directors?," Review of Quantitative Finance and Accounting, Springer, vol. 57(1), pages 279-320, July.
    10. Andres, Christian & Doumet, Markus & Fernau, Erik & Theissen, Erik, 2015. "The Lintner model revisited: Dividends versus total payouts," Journal of Banking & Finance, Elsevier, vol. 55(C), pages 56-69.
    11. Angelo Aspris & Ester Félez‐Viñas & Sean Foley & Hamish Malloch & Jiri Svec, 2024. "The market risk premium in Australia: Forward‐looking evidence from the options market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3951-3972, December.
    12. Brawn, Derek & Sevǐc, Aleksandar, 2015. "Net payout return: An alternative to the traditional returns approach based on dividends and share repurchases," Finance Research Letters, Elsevier, vol. 13(C), pages 66-73.
    13. H. Kent Baker & Erhan Kilincarslan & Sercan Demiralay, 2025. "A zero cash dividend policy: the UK experience," Review of Quantitative Finance and Accounting, Springer, vol. 65(2), pages 837-883, August.
    14. Yang, Bao & Chou, Hsin-I. & Zhao, Jing, 2020. "Innovation or dividend payout: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 68(C), pages 180-203.
    15. Thomas Hemmelgarn & Daniel Teichmann, 2014. "Tax reforms and the capital structure of banks," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 645-693, August.
    16. Beyer, Brooke & Downes, Jimmy & Rapley, Eric T., 2017. "Internal capital market inefficiencies, shareholder payout, and abnormal leverage," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 39-57.
    17. DeAngelo, Harry & DeAngelo, Linda & Stulz, René M., 2010. "Seasoned equity offerings, market timing, and the corporate lifecycle," Journal of Financial Economics, Elsevier, vol. 95(3), pages 275-295, March.
    18. Alpa Dhanani, 2005. "Corporate Dividend Policy: The Views of British Financial Managers," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(7‐8), pages 1625-1672, September.
    19. Gil Sadka, 2007. "Understanding Stock Price Volatility: The Role of Earnings," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 45(1), pages 199-228, March.
    20. Guidolin, Massimo & Ricci, Andrea, 2020. "Arbitrage risk and a sentiment as causes of persistent mispricing: The European evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 1-11.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

    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:uta:papers:2014_03. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/deuutus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.