An Empirical Examination of the Price-Dividend Relation with Dividend Management |
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| Authors: | Lucy F Ackert William C Hunter |
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| Institution: | (1) Department of Economics and Finances, Michael J. Coles College of Business, Kennesaw State University, Kennesaw, Georgia;(2) Research Department, Federal Reserve Bank of Atlanta, USA;(3) Research Department, Federal Reserve Bank of Chicago, USA |
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| Abstract: | Some recent empirical evidence suggests that stock prices are not properly modeled 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. |
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| Keywords: | stock price determination volatility dividend payout present value model |
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