Dividend, Investment and Financing Decisions: Empirical Evidence on French Firms

McDonald, John G.; Jacquillat, Bertrand; Nussenbaum, Maurice

doi:10.2307/2330268

Cited by 75 publications

(26 citation statements)

References 19 publications

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“…Harris and Raviv (1990) argue that debt is a device to solve the asymmetric information for the investors because it helps to monitor managers and force the firm to liquidation. In addition, our finding that increases in debt financing enhance the funds available to outlays for investment is consistent with McDonald et al (1975), McCabe (1979, Peterson and Benesh (1983), John and Nachman (1985), and Froot et al (1993). Thus, our optimal debt ratio may be the result of a trade-off between the value of information (from more debt) and the cost of monitor.…”

Section: Results Of Weak Instruments and Heteroskedasticitysupporting

confidence: 78%

“…Fama and French (2002) consider the interaction between dividend and financing decisions. Dhrymes and Kurz (1967), McDonald et al (1975), McCabe (1979, Peterson andBenesh (1983), andSwitzer (1984) argue that investment decision is related to financing decision and dividend decision. Harford et al (2014) consider the interdependence of a firm's cash holdings and the maturity of its debt by using a simultaneous equation framework and performing a 2SLS estimation.…”

Section: Introductionmentioning

confidence: 99%

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Applications of simultaneous equations in finance research: methods and empirical results

Lee

Liang

Lin

et al. 2015

Rev Quant Finan Acc

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The main purposes of this paper are: (1) to review finance literature using simultaneous equations method, (2) to discuss the difference among two-stage least squares (2SLS), three-stage least squares (3SLS) and generalized method of moments (GMM) methods under different assumptions, and (3) to investigate the interrelationship among investment, financing, and dividend decisions as an example to demonstrate the discussion. We review studies that apply the simultaneous equations estimation on capital structure, corporate investment, payout decisions, ownership structure, corporate governance, stock return, firm performance and/or other corporate issues. In addition to these three methods, we also present Pagan and Hall's (Econom Rev 2:159-218, 1983) test of heteroskedasticity and weak instruments test for selecting the applicable method and testing the validity of instruments. Finally, we investigate the interrelationship among investment, financing and dividend decisions using 2SLS, 3SLS, and GMM methods based on the US listed firm annual data between 1965 and 2012. Our results show that these three corporate decisions are co-determined and the interaction among them should be taken into account in a simultaneous equations framework.

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Section: Results Of Weak Instruments and Heteroskedasticitysupporting

confidence: 78%

Section: Introductionmentioning

confidence: 99%

Applications of simultaneous equations in finance research: methods and empirical results

Lee

Liang

Lin

et al. 2015

Rev Quant Finan Acc

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show abstract

“…Benartzi, Michaely, and Thaler (1997) found that the model of Lintner (1956) is the best model that describes dividend policy. Therefore, and following the works of McDonald and Jacquillat Nussenbaum (1975), Shevlin (1982), Partington (1984), Leithner and Zimmerman (1993), Dewenter and Warther (1998), Robinson (2006) and Wang and David Scott (2011), we use the full adjustment model, the partial adjustment model, Waud and Earnings trend model formulated as follows as suggested by Short and al (2002), to describe the relationship between dividends and ownership structure:…”

Section: Modelsmentioning

confidence: 99%

Dividends and Problem of Separation of Ownership and Control: Theory and Evidence from French Firms

Said¹

2013

IJEF

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This paper examines the determinants of dividends payout by focusing on the role of institutional and managerial ownership factors. It also highlights the impact of controlling shareholders on dividends payout ratios. It empirical studies the French context using a sample of 246 firms over a period of 11 years, extending from 1997 to 2007. The results indicate an inverse relationship between dividends payout and institutional ownership and support the negative effect of managerial ownership. The paper concludes, however, with the invalidity of the wealth expropriation hypothesis of minority shareholders by the controlling shareholders in both static and dynamic frameworks.

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“…Mussenbaum [30] , and Peterson and Benesh [33] , among others. Dhrymes and Kurz [11] and Fama [14] have developed simultaneous equation models to test these two extreme hypotheses and obtain entirely different empirical results.…”

Section: Interactions Of Dividend and Investment: A Test Of Signallinmentioning

confidence: 99%

Interactions of Dividends and Investment: A Test of the John and Williams Signalling Equilibrium Model

Lee

Chang²,

Finnerty

1986

The Financial Review

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Dividend, Investment and Financing Decisions: Empirical Evidence on French Firms

Cited by 75 publications

References 19 publications

Applications of simultaneous equations in finance research: methods and empirical results

Applications of simultaneous equations in finance research: methods and empirical results

Dividends and Problem of Separation of Ownership and Control: Theory and Evidence from French Firms

Interactions of Dividends and Investment: A Test of the John and Williams Signalling Equilibrium Model

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