Dividend Policy and Cash-Flow Uncertainty
We explore the role of expected cash-flow volatility as a determinant of dividend policy both theoretically and empirically. Our simple one-period model demonstrates that, given the existence of a stock-price penalty associated with dividend cuts, managers rationally pay out lower levels of dividends when future cash flows are less certain. The empirical results use a sample of REITs from 1985 to 1992 and confirm that payout ratios are lower for firms with higher expected cash-flow volatility as measured by leverage, size and property-level diversification. These results are consistent with information-based explanations of dividend policy but not with agency-cost theories. Copyright American Real Estate and Urban Economics Association.
Year of publication: |
1998
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Authors: | Bradley, Michael ; Capozza, Dennis R. ; Seguin, Paul J. |
Published in: |
Real Estate Economics. - American Real Estate and Urban Economics Association - AREUEA. - Vol. 26.1998, 4, p. 555-580
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Publisher: |
American Real Estate and Urban Economics Association - AREUEA |
Saved in:
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