Dividend reinvestment plans and Pecking Order capital structure behavior: An empirical investigation

Due to the asymmetric information effect, corporations have been reluctant to use external sources of equity capital. The adoption of dividend reinvestment plans (DRP) by large numbers of firms may indicate an alternative way to raise external equity funds. It has been shown that many factors may explain a firm’s decision concerning the source of the shares made available to DRP participants. The hypothesis to be tested is that the nature of the DRP actually selected may be predicted by financial characteristics such as cash flow generation, investment needs, historical dividend policy, firm ownership structure and firm capital structure. Using logistic regression analysis, results of joint tests of financial variables suggested by the Pecking Order Theory of capital structure indicate significant support for the hypothesis. Specifically, ownership structure, historical dividend policy and debt ratio are found to be key determinants of the type of DRP utilized.     

Buyer Search Intensity and the Role of the Residential Real Estate Broker

This study examines the impact of the real estate broker on the effectiveness of buyer search by focusing on the linkages between search intensity and the duration of search. How long a buyer searches depends on how sensitive the buyer is to within-period search costs and across-period, sequential search costs. High-income individuals and other homebuyers with high within-period search costs tend to search longer and less intensively. Buyers with high across-period search costs, such as out-of-town buyers, tend to search more intensively. Brokers, by reducing the opportunity costs of within-period search, increase buyer search intensity, which in turn reduces actual search time.     

Guest Editors' Introduction

Journal of Productivity Analysis -