Corporate Payout Policy, Cash Savings, and the Cost of Consistency: Evidence from a Structural Estimation

Material TypeArticleLanguageEnglish
TitleCorporate Payout Policy, Cash Savings, and the Cost of Consistency: Evidence from a Structural Estimation Author(S)Hamed Mahmudi (Author)
Abstract  We develop a dynamic structural model to better understand how corporate payout policy is determined in conjunction with other corporate decisions. In a first-best model, a manager maximizes equity value by choosing the firm's optimal financing, investment, dividends, and cash holdings. By using simulated method of moments, we show that, on average, firms excessively smooth their payout while making corporate savings overly volatile and retaining excess cash. ...Paginationp 843-874
SubjectManagementDescriptorsFinance
Journal TitleFinancial management  
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