CHOICE IN CONTEXT: RATIONALITY, CONTINGENCY AND RISK IN THE DIVIDEND POLICY

Narcis Tulbure ()
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Narcis Tulbure: Bucharest University of Economic Studies, Romania

Risk in Contemporary Economy, 2015, 388-395

Abstract: This paper is a critical review of the recent literature regarding the dividend policy with regards to the different conceptualizations of rationality demonstrated by managers of companies or individual investors. This approach gives us the opportunity to reassess the latest contributions to dividend policy analysis and to adopt an alternative perspective to those of authors that have split the literature on dividends in the normative vs. descriptive approaches, empirical vs. theoretical contributions, according to the distinct paradigms various approaches illustrate, or according to chronological criteria. We surmise that the issue of rationality / irrationality occasions a better understanding of the latest contributions to corporate finance from the subfields of behavioral finance and of cultural finance. Such contributions challenge the premises of rational choice, one that is foundational for the neoclassic paradigm. Behavioral corporate finance and cultural corporate finance underline the role of psychological and socio-cultural factors for the dividend policy. They facilitate the emergence of notions of situated / contingent rationality considered responsible for the diverse shapes taken by the financial policies of the corporation.

Keywords: Rationality; dividend policy; culture and finance (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ddj:fserec:y:2015:p:388-395

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