The Lintner model revisited: Dividends versus total payouts

Arbeitspapier

We analyze how the introduction of repurchases in 1998, and a major tax reform in 2001, affected the payout policy of German firms. To this end, we estimate Lintner (1956) partial adjustment models for both dividends and total payouts. We also analyze the implications for payout of changes in both permanent and transitory earnings. Our results are inconsistent with the hypothesis that dividends and repurchases are perfect substitutes. They are also inconsistent with the prediction that tax considerations are a major driver of payout decisions. Our results instead support the flexibility hypothesis that predicts that dividends are used to disburse permanent, and repurchases transitory, earnings.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFR Working Paper ; No. 14-02

Classification and Topics

• Classification: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Payout Policy
• Subject: Dividends ; Repurchases ; Lintner model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Andres, Christian ; Doumet, Markus ; Fernau, Erik ; Theissen, Erik
• Event: Veröffentlichung
• (who): University of Cologne, Centre for Financial Research (CFR)
• (where): Cologne
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/95960
• Last update: 10.03.2025, 11:43 AM CET