|
|
|
|
||||
|
||||
A Lintner Model of Payout and Managerial RentsBart M. LambrechtLancaster University - Management School Stewart C. MyersMassachusetts Institute of Technology (MIT); National Bureau of Economic Research (NBER) July 5, 2011 Journal of Finance, Forthcoming AFA 2011 Denver Meetings Paper Abstract: We develop a dynamic agency model where payout, investment and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout in order to smooth their flow of rents. Total payout (dividends plus net repurchases) follows Lintner's (1956) target-adjustment model. Payout smooths out transitory shocks to current income and adjusts gradually to changes in permanent income. Smoothing is accomplished by borrowing or lending. Payout is not cut back to finance capital investment. Risk aversion causes managers to underinvest, but habit formation mitigates the degree of underinvestment.
Number of Pages in PDF File: 61 Keywords: payout, investment, financing policy, agency JEL Classification: G31, G32 working papers seriesDate posted: March 16, 2010 ; Last revised: January 16, 2012Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo6 in 0.438 seconds
