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dividend reinvestment plan puzzle: Theoretical and empirical evidence
Title
The dividend reinvestment plan puzzle: Theoretical and empirical evidence.
Creator
Lyroudi, Katerina., Florida Atlantic University, McDaniel, William R.
Abstract/Description
This study examines the significance and implications of Dividend Reinvestment Plans (DRPs) for the sponsoring company and for the shareholders' wealth from a theoretical and an empirical point of view. It develops a DRP theory, as an extension of dividend and capital structure theories. Furthermore, the study tests empirically several hypotheses related to the market reaction at the announcement of a DRP adoption, to the market reaction at the announcement of a DRP discontinuance and to the...
Show moreThis study examines the significance and implications of Dividend Reinvestment Plans (DRPs) for the sponsoring company and for the shareholders' wealth from a theoretical and an empirical point of view. It develops a DRP theory, as an extension of dividend and capital structure theories. Furthermore, the study tests empirically several hypotheses related to the market reaction at the announcement of a DRP adoption, to the market reaction at the announcement of a DRP discontinuance and to the performance of the company sponsoring a DRP. The results indicated that the market reaction to the announcement of a DRP establishment is favorable on days 1 and 2, significant only for the latter. In the long-run, DRPs create value for the sponsoring firm and its shareholders (as measured by Tobin's Q). The announcement of a DRP termination is followed by a negative market reaction, consistent with the thesis of this study. Finally, several factors such as the DRP type (Type I and Type II plans), the industry of the sponsoring company (utilities and non-utilities), tax legislation, the discount feature and the dividend payout ratio are examined in relation to the market reaction at the announcement of a DRP adoption. The Type II DRPs create more favorable reaction to Type I plans at the announcement of their introduction. There are significant differences between the market reaction at the DRP introduction of utilities and non-utilities. The tax legislation affects corporate dividend policy and DRPs. Finally, the discount feature is not regarded favorably by investors as it was hypothesized, which explains its elimination from many DRPs in the recent years.
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Date Issued
1993
PURL
http://purl.flvc.org/fcla/dt/12328
Subject Headings
Dividend reinvestment, Corporations--Finance, Investments, Portfolio management
Format
Document (PDF)
empirical analysis of consumption behavior for selected European economies
Title
An empirical analysis of consumption behavior for selected European economies.
Creator
Lyroudi, Katerina., Florida Atlantic University, Manage, Neela D., College of Business, Department of Economics
Abstract/Description
This thesis first outlines the main theoretical approaches to the consumption function, such as the Absolute Income Hypothesis, the Relative Income Hypothesis, the Life-Cycle Hypothesis and the Permanent Income Hypothesis. Furthermore, it highlights the importance of expectations for consumption behavior and presents an econometric specification of the consumption function, utilizing the adaptive and rational expectations formation mechanisms. Important empirical issues regarding the...
Show moreThis thesis first outlines the main theoretical approaches to the consumption function, such as the Absolute Income Hypothesis, the Relative Income Hypothesis, the Life-Cycle Hypothesis and the Permanent Income Hypothesis. Furthermore, it highlights the importance of expectations for consumption behavior and presents an econometric specification of the consumption function, utilizing the adaptive and rational expectations formation mechanisms. Important empirical issues regarding the inclusion of other determinants of consumption are also discussed. Finally, an econometric analysis of consumption for Greece, Germany, France, Italy and the United Kingdom is presented.
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Date Issued
1988
PURL
http://purl.flvc.org/fcla/dt/14444
Subject Headings
Consumption (Economics)--Europe
Format
Document (PDF)