Dividend Policy and Empirical Evidence

The following sections are included:

• Introduction

• The Value of Dividend Policy to the Firm

  • Methods of Determining the Relevance of Dividends

    • The Discounted Cash-Flow Approach

    • The Investment Opportunities Approach

    • Stream-of-Dividends Approach

    • Stream-of-Earnings Approach

• Issues Marring the Dividend Problem

  • The Classical CAPM

  • Brennan's CAPM with Taxes

  • The Litzenberger and Ramaswamy CAPM with Taxes

  • Empirical Evidence

    • Gordon's Empirical Work and Its Extensions

    • M&M Empirical Work

    • CAPM Approach

• Behavioral Considerations of Dividend Policy

  • Partial Adjustment and Information Content Models

  • An Integration Model

• Summary and Conclusions

• Problem Set

• References for Chapter 16