An Empirical Examination of the Price-Dividend Relation with Dividend Management
30 Pages Posted: 26 Dec 2000
Date Written: December 2000
Some recent empirical evidence suggests that stock prices are not properly modelled 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.
JEL Classification: G12, C53
Suggested Citation: Suggested Citation