The Lintner model revisited: Dividends versus total payouts

Christian Andres, Markus Doumet, Erik Fernau and Erik Theissen

Journal of Banking & Finance, 2015, vol. 55, issue C, 56-69

Abstract: We analyze how the introduction of repurchases in 1998 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. We also find that repurchases have not taken over the role of special dividends. Our results support the flexibility hypothesis that predicts that (regular) dividends are used to disburse permanent, and more flexible payout methods (special dividends and repurchases) transitory, earnings.

Keywords: Dividends; Repurchases; Lintner model (search for similar items in EconPapers)
JEL-codes: G32 G35 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:55:y:2015:i:c:p:56-69

DOI: 10.1016/j.jbankfin.2015.01.005

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