Amount Of Dividends Research Articles

Executive Compensation in EREITs: EREIT Size is but One Determinant

Prior research of senior executive compensation in real estate investment trusts (REITs) has found REIT size as the sole statistically significant determinant of compensation. This research finds that size is only one of several determinants of equity REITs (EREIT) senior executive compensation. In addition to size as measured by EREIT market value, the designation of the EREIT as a retail EREIT, the percentage of stock owned by the senior executive, the dollar amount of dividends paid to the senior executive and the number of years since an EREIT’s initial public offering were found to be significant factors impacting senior executive compensation. The results also contrast with the general executive compensation literature that shows proxies for size as the primary determinants of executive compensation. This research indicates the need for industry specific compensation models to account for variation in executive compensation.

Ex—dividend day stock price falls on the Spanish stock market

In this paper the relative valuation of dividends and capital gains in the Spanish stock market is investigated by testing if the ex-dividend price fall equals the dividend amount. This study deals with the ex-dividend price behaviour considering as database the most representative shares in the Madrid Stock Exchange throughout the period 1980–92. On analysing the ex-dividend price fall ratio and the ex-dividend price ratio, the results lead us to conclude that in the Spanish capital market the ex—dividend price fall, in average terms, is significantly lower than the dividend amount, showing a clear preference for capital gains in relation to dividends.

Limit orders and ex-dividend day return distributions

NYSE Rule 118 and AMEX Rule 132 specify that on ex-dividend days, the prices given in open limit orders to buy stock be reduced by the dividend amount, and if the result is not a multiple of $0.125, the limit price is rounded down to the next lowest multiple of $0.125. Prices in open limit sell orders remain unchanged on the ex-day. This paper simulates a simple model of ex-dividend trading. As the number of open limit orders increases, the mean ex-day closing price and return increase for dividends greater than $0.25/share, and decrease for dividends less or equal to $0.125/share. The variance of ex-day returns decreases as the number of ex-day open limit orders increases.

Market reaction to the introduction of a foreign investor tax credit regime in New Zealand

This study examines the stock market reaction to the announcement of a new foreign investor dividend tax credit system in New Zealand. The new tax system provides foreign investors, who own less than a 10% stake in a New Zealand company, with supplementary dividends. These additional dividend payments substantially offset any liability for New Zealand non-resident withholding tax. The new tax regime effectively increased the amount of after-tax cash dividends received by foreign shareholders of New Zealand companies. The empirical results indicate that significant and positive abnormal returns were concentrated predominantly on companies with fully imputed high dividend yields and high corporate tax rates. The evidence is consistent with the hypothesis that tax policy affects stock market behavior.

Investors' Heterogeneity, Prices, and Volume around the Ex-Dividend Day

This paper analyzes the relationship between tax heterogeneity and the behavior of stock prices and trading volume around the ex-dividend day within an equilibrium framework. We conclude that, even in a world without transaction costs, the price drop on the ex-day need not be equal to the dividend amount. Our model accounts for the higher market trading volume around the ex-day, and shows this to be a function of tax heterogeneity among traders. We show that the volume of trade around the ex-day contains information about investors' tax preferences above and beyond the information contained in the ex-day price alone. Consistent with the model's predictions, our empirical analysis reveals that as the risk associated with the ex-dividend day increases, or tax heterogeneity decreases, trading volume decreases.

Ex-Dividend Price Behavior of Common Stocks

This study examines common stock prices around ex-dividend dates. Such price data usually contain a mixture of observations--some with and some without arbitrageurs and/or dividend capturers active. Our theory predicts that such mixing will result in a nonlinear relation between percentage price drop and dividend yield--not the commonly assumed linear relation. This prediction and another important prediction of theory are supported empirically. In a variety of tests, marginal price drop is not significantly different from the dividend amount. Thus, over the last several decades, one-for-one marginal price drop has been an excellent (average) rule of thumb. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.

A Market Microstructure Explanation of Ex-Day Abnormal Returns

Several authors have previously determined that abnormal returns exist on ex-cash dividend days and ex-stock dividend days. In other words, stocks do not, on average, fall by the dividend amount, or fully adjust to stock distributions on ex-days. This paper proposes that NYSE Rule 118 and AMEX Rule 132 are a determinant of those ex-day abnormal returns.

The non-optimality of the over-the-counter options dividend protection

Although no such adjustments are made in exchange listed options, options in the over-the-counter (OTC) market are adjusted for cash dividends by reducing their striking prices by the amount of the cash dividend on each ex-dividend date. We prove that if a call is either out-, at- or in-the-money (just before the ex-dividend dates), the OTC-dividend-protection procedure generates a sure loss to the call buyer, but it tends to be correct if a call is very-deep-in-the-money.

RECENT DEVELOPMENTS IN THE THEORY OF CORPORATE FINANCE

The field of corporate finance is a vast one: in order to keep this paper manageable I shall focus on two well-known puzzles of corporate finance. The first has been described by Black (1976) as the dividend puzzle and the second by Myers (1984) as the capital structure puzzle. Underlying these two puzzles are similar considerations. Both originate in the application of competitive equilibrium analysis to corporate financial behaviour in two classic papers by Modigliani and Miller (Modigliani and Miller 1958, Miller and Modigliani 1961). Modigliani and Miller showed that if firms and investors enjoy the same financial opportunities then under conditions of perfectly competitive capital markets, no asymmetries of information between different agents, and no variations in the tax treatment of different forms of finance corporate financial policy is irrelevant. The value of a firm is determined entirely by its real decisions and is completely unaffected by the ratio of debt to equity finance in its capital structure or by the amount of dividends it pays out (for a given investment plan). The stark contrast between Modigliani and Miller's theoretical analysis and empirical observations of the importance attached to capital structure and dividend decisions by both firms and investors is part of the capital structure and dividend puzzles. But it is not all. For it remains true that nearly thirty years after the original Modigliani-Miller paper was first published, despite enormous efforts on the part of many researchers, a proper understanding of what determines companies' borrowing and dividend decisions is still elusive.

The Irrelevance of Compounding Frequency in Determining a Utility's Cost of Equity

The relevance of the frequency of compounding in utility rate regulation is often misunderstood. Increasingly, analysts have advocated that the allowed return on equity capital should be the quarterly or continuously compounded equivalent of the market determined annual rate of return estimate emerging from a discounted cash flow (DCF) analysis. Of course, restating an annual rate of return in terms of its quarterly or continuously compounded equivalent creates a lower return measure. If this lower return were applied to an unchanged rate base, the resulting estimates of the utility's earnings and revenue requirements would also be lower. However, the use of a quarterly or continuously compounded rate will not alter the estimate of a utility's annual earnings requirement as long as it is implemented with a rate base construct that is consistent with quarterly or continuous compounding. That is, regardless of the frequency of compounding, the allowed rate of return and, hence, service rates must be set at levels that are expected to generate the quarterly dividends and growth in investment (share price) requ red by investors. Linke-Zumwalt [1] and Siegel [2] have explored the effect on capital cost estimation when recognition is given to the fact that firms commonly pay dividends quarterly but change the dividend amount only periodically. Both articles demonstrated that the market return estimate based on quarterly dividends is higher than

A Retirement Plan Decision Model for Small Business

A Retirement Plan Decision Model for Small Business

Optimal Growth Of A Firm Facing A Risk Of Bankruptcy

The paper examines the optimal growth strategy of a firm confronted with an uncertain environment and trying to maximize the mathematical expectation of the discounted value of the dividends distributed during the life of the firm. For each elementary time period the profits are a random function of the equipment level, and while respecting several constraints, the firm must simultaneously choose the level of investment, the amount of dividends, the amounts borrowed or reimbursed, and the sums devoted to cash Improvement. The optimal strategy at each time is a function of the equipment level, of the cash position, and of the total borrowing. The mathematical formulation of the problem leads to a partial differential equation. After having determined on the basis of this equation the formal management rules, the paper studies the strategies on a numerical example and discusses the influence of the risk magnitude, of the borrowing interest rate and of the total amount borrowed. Thus, the various roles of borrowing in the growth policy of a firm facing a risk of bankruptcy are clearly analysed.

Bank Dividend Policy and Holding Company Affiliation

This study compares the dividend policies of independently owned and bank holding company-affiliated commercial banks. The hypothesis tested is that there exists a significant, positive relationship between the amount of cash dividends paid by a bank and its affiliation with a holding company. The issue is an important one because the distribution of earnings as dividends obviously reduces a bank's ability to generate capital internally, and retained earnings have been the chief source of growth in bank equity capital. For some time the bank supervisory authorities have been concerned over the relative decline in importance of capital in the balance sheet of the average bank, such funds permitting banks to absorb unexpected losses and weather periods of financial crises. Capital adequacy is thus a major consideration in the regulators' assessment of bank dividend policy. Prior research has shown that the banking subsidiaries of bank holding companies have maintained lower capital in relation to assets than have other banks despite achieving greater profitability. Since a bank's capital position is usually positively correlated with its earnings, this implies that affiliated banks have been more generous in paying dividends. Indeed, the statistical evidence of this study indicates that the banking subsidiaries of holding companies paid significantly higher dividends than other banks over the four–year period from 1973 through 1976. Whether or not this has resulted in these firms maintaining less than “adequate†capital is a question that goes far beyond the scope of this paper, but which ultimately must be considered.

The Flow of Funds Statement. An Effective Tool

How many dollars were poured into new investments this year? What additions to buildings and equipment were made during the year? Were premium and investment revenues sufficient to cover benefit payments, operating expenses, and taxes? Did new issues of capital stock occur this year? Are stockholders receiving larger or smaller amounts of cash dividends? The above questions relate to transactions occurring within the typical life insurance company today, which are of considerable interest to financial statement readers within and outside the industry. Unfortunately, the answers to many of these questions are difficult to find in the current versions of financial reports prepared by life insurance companies. Three primary statements appear * Dale Armstrong, Ph.D., C.P.A., is Associate Professor of Accounting at Oklahoma State University. This article represents an expanded development of concepts described in the author's doctoral dissertation prepared at the University of Texas under the supervision of Professors C. Aubrey Smith and John S. Bickley. A condensed version of the dissertation, entitled An Examination of External Financial Reporting Practices and Underlying Accounting Principles Applicable to Life Insurance Companies, was published in 1968 by the College of Business, Oklahoma State University, as Research Study No. 5. The Research Foundation, Oklahoma State University, provided funds to finance the additional research undertaken in the preparation of this article. in the annual statement that is submitted to state insurance departments-Assets; Liabilities, Surplus and Other Funds; Summary of Operations; and Surplus Account. Condensed replicas of these financial reports are distributed to stockholders, policyholders, and other interested parties. The result to date-mass confusion. Even the financial analysts express deep concern over hoiw they can interpret the financial operations of these organizations in a manner that will convey some useful meaning to their respective readers.

Bank for International Settlements

The 32nd annual report of the Bank for International Settlements, covering the financial year from April 1, 1961, to March 31, 1962, was submitted to the annual general meeting of the Bank held in Basle on June 4, 1962. In his introduction, the General Manager of the Bank, Mr. Guillaume Guindey, reported that the accounts for the 32nd financial year closed with a surplus of 20,185,172 gold francs, as against 27,324,105 gold francs for the previous year. The reduction in the volume of gold transactions handled accounted for the greater part of the decline in the year's earnings. After deduction of 7,500,000 gold francs was transferred to the provision for contingencies, the net profit amounted to 12,685,172 gold francs, compared with 14,974,105 gold francs for the preceding year. The annual general meeting decided to distribute a dividend of 37.50 gold francs per share. In view of the results for the financial year 1961–1962, the meeting also decided that, as an exception measure, a lump sum of 4.5 million gold francs should be applied in the forthcoming year to the further reduction of the amount of the undeclared cumulative dividend.

The Privilege Dividend Tax In Wisconsin

Dividends or incomes received by any person from stocks, or interest in any firm, copartnership, corporation, joint stock company or association, the income of which shall have been assessed under the provisions of this act; provided, said firm, copartnership, corporation, joint stock company or association report at the time of assessment the name and address of each such person owning stock or interest in the same and the amount of dividends or income paid such person during the assessment year.

A Recording and Integrating Gas Calorimeter

UNDERTAKINGS operating under the provisions of the Gas Regulation Act 1920, are required to deliver gas of a declared calorific value to consumers, and charges to individual consumers are to be based upon the value of the total thermal energy supplied to each. By calorific value is to be understood the number of B.Th.U. produced by the combustion of 1 cubic foot of gas measured at 60° F. under a pressure of 30 inches of mercury and saturated with water vapour. Under the Act, penalties are to be inflicted upon the gas undertaking, if on any day for a period of two hours or more the calorific value of the gas supplied is more than 6 per cent, below the declared calorific value, or if in any quarter the average calorific value is less than the declared calorific value. Embodied in Orders under the Act are clauses governing the price per therm (100,000 B.Th.U.) to be charged by individual gas undertakings, and the amount of dividend to be paid to proprietors, as regulated by this price. Such, in brief, are the main thermal clauses of the Gas Regulation Act 1920—the Charter of Liberty of the gas industry in this country, and the consumers' guarantee that gas undertakings must and will “deliver the goods.”