Chapter

Dividend Policy, Earnings, and Cash Flow: A Dynamic Panel Data Analysis

Luis Correia Da Silva, Marc Goergen and Luc Renneboog

in Dividend Policy and Corporate Governance

Published in print February 2004 | ISBN: 9780199259304
Published online April 2004 | e-ISBN: 9780191600852 | DOI: http://dx.doi.org/10.1093/0199259305.003.0006
 Dividend Policy, Earnings, and Cash Flow: A Dynamic Panel Data Analysis

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Benefiting from recent advances in panel data estimation, the chapter estimates the Lintner model for German firms. The Lintner model is estimated using both cash flow data and published earnings data. When the former are used, the implicit target payout ratio is much closer to the observed target payout ratio than when the latter is used. We conclude that target payout ratios of German firms are based on cash flow figures rather than published earnings figures.

Keywords: cash flow; dividend policy; generalized method of moments; Germany; Lintner model; panel data models; partial dividend adjustment model; published earnings; UK; US

Chapter.  11252 words. 

Subjects: Financial Markets

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