Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55235
Authors: 
Gürtler, Marc
Hartmann, Nora
Year of Publication: 
2003
Series/Report no.: 
Working papers // Institut für Finanzwirtschaft, Technische Universität Braunschweig FW04V1
Abstract: 
In this paper we develop an optimal dividend policy in the presence of limited rational inves-tors. Concretely, investors with mental accounts for dividends and stock prices as well as emotions like disappointment and elation embody the limited rationality. Furthermore, investors evaluate changes in wealth instead of final wealth. A management maximizing investors' modified utility results in the optimality of dividend payments as well as dividend smoothing, which both have long been puz-zles to financial theorists. Moreover, a model specification leads to a gradual dividend adjustment to changes in net earnings as described by Lintner (1956).
Subjects: 
dividend policy
dividend smoothing
behavioral finance
JEL: 
G35
Document Type: 
Working Paper

Files in This Item:
File
Size
304.08 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.