Dividend smoothing and firm valuation

Brockman, Paul ; Hanousek, Jan ; Tresl, Jiri ; Unlu, Emre

DOI: https://doi.org/10.1017/S0022109021000673
URL: https://www.cambridge.org/core/journals/journal-of...
Additional URL: https://www.researchgate.net/publication/355858275...
Document Type: Article
Year of publication: 2022
The title of a journal, publication series: Journal of Financial and Quantitative Analysis : JFQA
Volume: 57
Issue number: 4
Page range: 1621-1647
Place of publication: New York, NY
Publishing house: Cambridge University Press
ISSN: 0022-1090 , 1756-6916
Publication language: English
Institution: Business School > ABWL, Finanzwirtschaft u. Finanzmarktinstitutionen (Spalt 2019-)
Subject: 330 Economics
Abstract: We examine the relationship between dividend smoothing and firm valuation across 21 countries using several empirical methods and smoothing measures. Our main results show that dividends are capitalized at significantly larger values for high-smoothing firms than for low-smoothing firms. We also find that dividend-smoothing premiums are higher in countries with weak shareholder protection – suggesting that smoothing serves as a substitute mechanism to reduce agency costs. Overall, our findings support the view that managers use dividend smoothing predominantly as a bonding mechanism to reduce agency costs (Leary and Michaely (2011)), and not as a rent extraction mechanism (Lambrecht and Myers (2012)).

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.

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