The European Union (EU) has been debating for several years whether to change from the legal capital regime as regulated under the Second Company Law Directive to a solvency test regime as applied in the US, for example. Based on an analysis of direct compliance costs and capital maintenance...

In spite of mounting losses banks continued to pay dividends during the crisis. We present a model that addresses this behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks. This way, one bank's dividend payout policy...

This paper examines the effect of relationship duration with major customer on supplier's payout policies. I find that firm which remains the relation with major customer in a longer period pays higher dividend. This finding is unbiased by the substitutional effect between dividend and...

We develop a dynamic agency model of a public corporation. Managers underinvest because of risk aversion. They smooth rents and payout. They do not exploit interest tax shields fully. The interactions of investment, debt and payout decisions can change drastically depending on managers'...

This paper studies a model of corporate finance in which firms use stock issuance to finance investment. We assume that the firm is "rational" and therefore recognizes the relationship between future dividends and stock prices. Under this assumption, future variables enter in the constraints of...