1、外文翻译股利政策一个综述#外文原文#Dividend policy:# a review#1. Introduction#Explaining dividend policy has been one of the most difficult challenges facing financial economists. Despite decades of study, we have yet to completely understand the factors that influence dividend policy and the manner in which these f
2、actors interact. Allen and Michaely （1995） conclude that much more empirical and theoretical research on the subject of dividends is required before a consensus can be reached （p. 833）. The fact that a major textbook such as Brealey and Myers （2002） lists dividends as one of the ten important unsolv
3、ed problems in finance reinforces this conclusion. The first empirical study of dividend policy was provided by Lintner （1956）, who surveyed corporate managers to understand how they arrived at the dividend policy. Lintner found that an existing dividend rate forms a bench mark for the management. C
4、ompanies management usually displayed a strong reluctance to reduce dividends. Lintner opined that managers usually have reasonably definitive target payout ratios.Over the years, dividends are increased slowly at a particular speed of adjustment, so that the actual payout ratio moves closer to the
5、target payout ratio.#2. Dividend irrelevance and tax clienteles#While Lintner （1956） provided the stylistic description of dividends, the watershed in the theoretical modelling of dividends was almost surely the classic paper Miller and Modigliani （1961）, which first proposed dividend irrelevance. E
6、ssentially, their model is a one-period model under certainty. Given a firms investment program, the dividend policy of the firm is irrelevant to the firm value, since a higher dividend would necessitate more sale of stock to raise finances for the investment program. The crucial assumption here is
7、that the futuremarket valuewill remain unaffected by current dividends. #The argument rests on the assumptions that the investment program is determined independently and that every stockholder earns the same return （i.e. the discount rate remains constant）. Miller and Modiglianis dividend-irrelevan
8、ce argument is elegant, but this does not explainwhy companies, the public, investment analysts are so interested in dividend announcements. Clearly, the observed interest in dividend announcement must be related to some violation of theMiller andModigliani assumptions.Miller and Modigliani, while f
9、ormulating their famous dividend irrelevance propositions, observed that in the presence of taxation, investors will form clienteles with specific preferences for particular levels of dividend yields. This specific preference for dividends may be determined, inter alia, by the marginal tax rates fac
10、ed by the investor. Altering the dividend level, according to Miller and Modigliani, leads only to a change in the clientele of shareholders for the firm. Part of the dividend puzzle arises from the fact that dividends are typically taxed at a higher rate compared to the income from capital gains. T
11、his has certainly been historically true although in recent years we have noticed a move to eliminate/reduce tax on dividends. We should, therefore, expect investors to prefer cash from capital gains over cash from dividends. #Miller and Scholes （1978） provide an ingenious scheme to convert dividend
12、 income to capital gains income. Recently Allen et al. （2000） have advanced a theory based on the clientele paradigm to explain why some firms pay dividends and others repurchase shares. A variant of the clientele theory has also been advanced by Baker （2004） where they posit that dividend payments
13、are in response to demands from investors for dividends.#3. Informational asymmetry and signalling models#Deviations from the Miller and Modigliani （1961） dividend irrelevance proposition is obtainable only when the assumptions underlying the setting of Miller and Modigliani are violated. The tax-cl
14、ientele hypothesis uses the market imperfection of differential taxation of dividends and capital gains to explain the dividend puzzle. Bhattacharyya （1979） develops another explanation for the dividend policy based on asymmetric information. Managers have private knowledge about the distributional
15、support of the project cash flow and they signal this knowledge to the market through their choice of dividends. #In the signalling equilibrium higher value of the support is signalled by higher dividend. In other words, the better the news, the higher is the dividend. Heinkel （1978） considers a set
16、 up where different firms have different return-generating abilities. This information is transmitted to the market by means of dividends, or equivalently, from investing at less than the first best level. In the equilibrium of Heinkels model, the firm with less productivity invests up to its first
17、best level and declares no dividend, while the firm with higher productivity invests less than its first best level of investment, and declares the difference between the amount raised and the amount invested as the dividend. The firm with higher productivity acts in this way in order to distinguish
18、 itself from the firm with less productivity. Dividends are still irrelevant in the sense that both firm types could raise an extra X dollars with a new issue to pay an extra X dollars as a dividend with no signalling effect. The signalling cost in this model comes from reduced investment from first
19、 best level. In contrast, the signalling cost in Bhattacharyya （1979） comes from taxation and non-symmetric cost of raising funds in the capital market. Bhattacharyya and Heinkels work was followed by a number of other papers which posited that dividends are used by managers to transmit information
20、to the capital market. #Notable works in signalling paradigm of dividend policy are those of Miller and Rock （1985）, John andWilliams （1985） andWilliams （1988）. These signalling models typically characterize the informational asymmetry by bestowing the manager or the insider with information about s
21、ome aspect of the future cash flow. In the signalling equilibriums obtained in these models, the higher the expected cash flow, the higher is the dividend. In Miller and Rock （1985）, the signalling cost is the opportunity cost of less than first best investment. In John and Williams （1985）, and Will
22、iams （1988）, the differential taxation of dividends vis-a-vis capital gains sustains the signalling equilibriums. In these papers dividends sustain a fully separating equilibrium. By contrast, Kumar （1988） demonstrates that dividends could also sustain a semi-separating equilibrium where the manager
23、 has private information about the productivity of the firm. Venezia （1991） set up a rational equilibrium expectation model. Bayesian investors expect that dividends will be proportional to cash flows. Managers have advance noisy information about the future cash flow. The investors observe the divi
24、dend and update their belief about the cash flow. Under these circumstances, Venezia show that the optimal dividend is proportional to the cash flow. Brennan and Thakor （1990） focus on a different question compared to the other signalling type papers on dividend policy. Most dividend policy papers m
25、odel the dividend decision, as a decision about the amount to be distributed as dividends. In contrast, this paper views the amount of cash to be distributed as exogenously given. It consider three forms of disbursement:# dividebd declaration, non-proportionate share repurchase through open market o
26、peration, and non-proportionate share repurchase through tender offer. Brennan and Thakor assume that there are two classes of shareholders informed and uninformed. They show that in a tender offer, the uninformed shareholder always tenders, whereas the informed holds onto his/her shares. The situat
27、ion is reversed in an open market operation, where the informed shareholder always sell his/her holding and the uninformed never does.#4. Free cash flow hypothesis#The rich theoretical development in modelling dividends as signals of private managerial/entrepreneurial information also gave rise to e
28、mpirical research seeking to determine the fit of the signalling theory to real world data. Typically, the empirical literature attempted to test the signalling paradigm counterpoised against an alternative rationale for dividends advanced by Jensen （1986）, based on the principal- agent framework. A
29、ccording to this framework, dividends are used by shareholders as a device to reduce overinvestment by managers. The managers control the firm;# therefore, they might invest cash in projects with negative net present values, but which increase the personal utility of the managers in some way. A divi
30、dend reduces this free cash flow and thus reduces the scope for overinvestment. The two most cited works in this genre are the papers by Easterbrook （1984） and by Jensen （1986）. Unfortunately, neither of these papers try to model the situation;# rather, they put forward plausible hypotheses. On the
31、one hand, Easterbrook （1984） hypothesizes that dividends are used to take away the free cash from the control of the managers and pay it off to shareholders. This ensures that the managers will have to approach the capital market in order to meet the funding needs for new projects. The need to appro
32、ach the capital markets imposes a discipline on the managers, and thus reduces the cost of monitoring the managers. Additionally, Easterbrook hypothesizes that the imperative to approach the capital market also acts as a counterweight to the managers own risk aversion. Jensen （1986） on the other han
33、d, contends that in corporations with large cash flows, managers will have a tendency to invest in low return projects. According to Jensen, debt counters this by taking away the free cash flow. Jensen contends that takeovers and mergers take place when either the acquirer has a large quantum of free cash flow or the acquired has a large free cash flow which has not been paid
