An Empirical Examination of the Price-Dividend Relation with Dividend Management
Posted: 12 Sep 2001
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An Empirical Examination of the Price-Dividend Relation with Dividend Management
Abstract
Some recent empirical evidence suggests that stock prices are not properly modeled 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.
Keywords: Stock price determination, volatility, dividend payout, present value model
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