外文翻译股利政策一个综述.docx

外文翻译股利政策一个综述.docx

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外文翻译股利政策一个综述

外文原文

Dividendpolicy:

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1.Introduction

Explainingdividendpolicyhasbeenoneofthemostdifficultchallengesfacingfinancialeconomists.Despitedecadesofstudy,wehaveyettocompletelyunderstandthefactorsthatinfluencedividendpolicyandthemannerinwhichthesefactorsinteract.AllenandMichaely（1995）concludethat‘‘muchmoreempiricalandtheoreticalresearchonthesubjectofdividendsisrequiredbeforeaconsensuscanbereached’’（p.833）.ThefactthatamajortextbooksuchasBrealeyandMyers（2002）listsdividendsasoneofthetenimportantunsolvedproblemsinfinancereinforcesthisconclusion.ThefirstempiricalstudyofdividendpolicywasprovidedbyLintner（1956）,whosurveyedcorporatemanagerstounderstandhowtheyarrivedatthedividendpolicy.Lintnerfoundthatanexistingdividendrateformsabenchmarkforthemanagement.Companies’managementusuallydisplayedastrongreluctancetoreducedividends.Lintneropinedthatmanagersusuallyhavereasonablydefinitivetargetpayoutratios.Overtheyears,dividendsareincreasedslowlyataparticularspeedofadjustment,sothattheactualpayoutratiomovesclosertothetargetpayoutratio.

2.Dividendirrelevanceandtaxclienteles

WhileLintner（1956）providedthestylisticdescriptionofdividends,thewatershedinthetheoreticalmodellingofdividendswasalmostsurelytheclassicpaperMillerandModigliani（1961）,whichfirstproposeddividendirrelevance.Essentially,theirmodelisaone-periodmodelundercertainty.Givenafirm’sinvestmentprogram,thedividendpolicyofthefirmisirrelevanttothefirmvalue,sinceahigherdividendwouldnecessitatemoresaleofstocktoraisefinancesfortheinvestmentprogram.Thecrucialassumptionhereisthatthefuturemarketvaluewillremainunaffectedbycurrentdividends.

Theargumentrestsontheassumptionsthattheinvestmentprogramisdeterminedindependentlyandthateverystockholderearnsthesamereturn（i.e.thediscountrateremainsconstant）.MillerandModigliani’sdividend-irrelevanceargumentiselegant,butthisdoesnotexplainwhycompanies,thepublic,investmentanalystsaresointerestedindividendannouncements.Clearly,theobservedinterestindividendannouncementmustberelatedtosomeviolationoftheMillerandModiglianiassumptions.MillerandModigliani,whileformulatingtheirfamousdividendirrelevancepropositions,observedthatinthepresenceoftaxation,investorswillformclienteleswithspecificpreferencesforparticularlevelsofdividendyields.Thisspecificpreferencefordividendsmaybedetermined,interalia,bythemarginaltaxratesfacedbytheinvestor.Alteringthedividendlevel,accordingtoMillerandModigliani,leadsonlytoachangeintheclienteleofshareholdersforthefirm.Partofthedividendpuzzlearisesfromthefactthatdividendsaretypicallytaxedatahigherratecomparedtotheincomefromcapitalgains.Thishascertainlybeenhistoricallytruealthoughinrecentyearswehavenoticedamovetoeliminate/reducetaxondividends.Weshould,therefore,expectinvestorstoprefercashfromcapitalgainsovercashfromdividends.

MillerandScholes（1978）provideaningeniousschemetoconvertdividendincometocapitalgainsincome.RecentlyAllenetal.（2000）haveadvancedatheorybasedontheclienteleparadigmtoexplainwhysomefirmspaydividendsandothersrepurchaseshares.AvariantoftheclienteletheoryhasalsobeenadvancedbyBaker（2004）wheretheypositthatdividendpaymentsareinresponsetodemandsfrominvestorsfordividends.

3.Informationalasymmetryandsignallingmodels

DeviationsfromtheMillerandModigliani（1961）dividendirrelevancepropositionisobtainableonlywhentheassumptionsunderlyingthesettingofMillerandModiglianiareviolated.Thetax-clientelehypothesisusesthemarketimperfectionofdifferentialtaxationofdividendsandcapitalgainstoexplainthedividendpuzzle.Bhattacharyya（1979）developsanotherexplanationforthedividendpolicybasedonasymmetricinformation.Managershaveprivateknowledgeaboutthedistributionalsupportoftheprojectcashflowandtheysignalthisknowledgetothemarketthroughtheirchoiceofdividends.

Inthesignallingequilibriumhighervalueofthesupportissignalledbyhigherdividend.Inotherwords,thebetterthenews,thehigheristhedividend.Heinkel（1978）considersasetupwheredifferentfirmshavedifferentreturn-generatingabilities.Thisinformationistransmittedtothemarketbymeansofdividends,orequivalently,frominvestingatlessthanthefirstbestlevel.IntheequilibriumofHeinkel’smodel,thefirmwithlessproductivityinvestsuptoitsfirstbestlevelanddeclaresnodividend,whilethefirmwithhigherproductivityinvestslessthanitsfirstbestlevelofinvestment,anddeclaresthedifferencebetweentheamountraisedandtheamountinvestedasthedividend.Thefirmwithhigherproductivityactsinthiswayinordertodistinguishitselffromthefirmwithlessproductivity.DividendsarestillirrelevantinthesensethatbothfirmtypescouldraiseanextraXdollarswithanewissuetopayanextraXdollarsasadividendwithnosignallingeffect.Thesignallingcostinthismodelcomesfromreducedinvestmentfromfirstbestlevel.Incontrast,thesignallingcostinBhattacharyya（1979）comesfromtaxationandnon-symmetriccostofraisingfundsinthecapitalmarket.BhattacharyyaandHeinkel’sworkwasfollowedbyanumberofotherpaperswhichpositedthatdividendsareusedbymanagerstotransmitinformationtothecapitalmarket.

NotableworksinsignallingparadigmofdividendpolicyarethoseofMillerandRock（1985）,JohnandWilliams（1985）andWilliams（1988）.Thesesignallingmodelstypicallycharacterizetheinformationalasymmetrybybestowingthemanagerortheinsiderwithinformationaboutsomeaspectofthefuturecashflow.Inthesignallingequilibriumsobtainedinthesemodels,thehighertheexpectedcashflow,thehigheristhedividend.InMillerandRock（1985）,thesignallingcostistheopportunitycostoflessthanfirstbestinvestment.InJohnandWilliams（1985）,andWilliams（1988）,thedifferentialtaxationofdividendsvis-a-viscapitalgainssustainsthesignallingequilibriums.Inthesepapersdividendssustainafullyseparatingequilibrium.Bycontrast,Kumar（1988）demonstratesthatdividendscouldalsosustainasemi-separatingequilibriumwherethemanagerhasprivateinformationabouttheproductivityofthefirm.Venezia（1991）setuparationalequilibriumexpectationmodel.Bayesianinvestorsexpectthatdividendswillbeproportionaltocashflows.Managershaveadvancenoisyinformationaboutthefuturecashflow.Theinvestorsobservethedividendandupdatetheirbeliefaboutthecashflow.Underthesecircumstances,Veneziashowthattheoptimaldividendisproportionaltothecashflow.BrennanandThakor（1990）focusonadifferentquestioncomparedtotheothersignallingtypepapersondividendpolicy.Mostdividendpolicypapersmodelthedividenddecision,asadecisionabouttheamounttobedistributedasdividends.Incontrast,thispaperviewstheamountofcashtobedistributedasexogenouslygiven.Itconsiderthreeformsofdisbursement:

dividebddeclaration,non-proportionatesharerepurchasethroughopenmarketoperation,andnon-proportionatesharerepurchasethroughtenderoffer.BrennanandThakorassumethattherearetwoclassesofshareholders–informedanduninformed.Theyshowthatinatenderoffer,theuninformedshareholderalwaystenders,whereastheinformedholdsontohis/hershares.Thesituationisreversedinanopenmarketoperation,wheretheinformedshareholderalwayssellhis/herholdingandtheuninformedneverdoes.

4.Freecashflowhypothesis

Therichtheoreticaldevelopmentinmodellingdividendsassignalsofprivatemanagerial/entrepreneurialinformationalsogaverisetoempiricalresearchseekingtodeterminethefitofthesignallingtheorytorealworlddata.Typically,theempiricalliteratureattemptedtotestthesignallingparadigmcounterpoisedagainstanalternativerationalefordividendsadvancedbyJensen（1986）,basedontheprincipal-agentframework.Accordingtothisframework,dividendsareusedbyshareholdersasadevicetoreduceoverinvestmentbymanagers.Themanagerscontrolthefirm;therefore,theymightinvestcashinprojectswithnegativenetpresentvalues,butwhichincreasethepersonalutilityofthemanagersinsomeway.Adividendreducesthisfreecashflowandthusreducesthescopeforoverinvestment.ThetwomostcitedworksinthisgenrearethepapersbyEasterbrook（1984）andbyJensen（1986）.Unfortunately,neitherofthesepaperstrytomodelthesituation;rather,theyputforwardplausiblehypotheses.Ontheonehand,Easterbrook（1984）hypothesizesthatdividendsareusedtotakeawaythefreecashfromthecontrolofthemanagersandpayitofftoshareholders.Thisensuresthatthemanagerswillhavetoapproachthecapitalmarketinordertomeetthefundingneedsfornewprojects.Theneedtoapproachthecapitalmarketsimposesadisciplineonthemanagers,andthusreducesthecostofmonitoringthemanagers.Additionally,Easterbrookhypothesizesthattheimperativetoapproachthecapitalmarketalsoactsasacounterweighttothemanagers’ownriskaversion.Jensen（1986）ontheotherhand,contendsthatincorporationswithlargecashflows,managerswillhaveatendencytoinvestinlowreturnprojects.AccordingtoJensen,debtcountersthisbytakingawaythefreecashflow.Jensencontendsthattakeoversandmergerstakeplacewheneithertheacquirerhasalargequantumoffreecashflowortheacquiredhasalargefreecashflowwhichhasnotbeenpaid