Abstract

http://ssrn.com/abstract=820311
 
 

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Growth, Beta and Agency Costs as Determinants of Dividend Payout Ratios


Michael S. Rozeff


SUNY at Buffalo - Department of Financial & Managerial Economics


Journal of Financial Research, Vol. 5, No. 3, pp. 249-259, Fall 1982

Abstract:     
A model of optimal dividend payout is presented in which increased dividends lower agency costs but raise the transactions cost of external financing. The optimal dividend payout ratio minimizes the sum of these two costs. A cross-sectional test of the model relates dividend payout to the fraction of equity held by insiders, the past and expected future revenue growth of the firm, the firm's beta coefficient, and the number of common stockholders. The coefficients of all variables are significant in the predicted directions. The results indicate that investment policy influences dividend policy.

Number of Pages in PDF File: 11

Keywords: dividends, agency costs, dividend payout

JEL Classification: G32, G35

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Date posted: October 19, 2005  

Suggested Citation

Rozeff, Michael S., Growth, Beta and Agency Costs as Determinants of Dividend Payout Ratios. Journal of Financial Research, Vol. 5, No. 3, pp. 249-259, Fall 1982. Available at SSRN: http://ssrn.com/abstract=820311

Contact Information

Michael S. Rozeff (Contact Author)
SUNY at Buffalo - Department of Financial & Managerial Economics ( email )
Buffalo, NY 14260
United States
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