Valuation of Closely-Held Stock for Federal Tax Purposes: Approach to an Objective Method

O'Meara, Joseph; Johnson, Lyle R.; Shapiro, Eli

doi:10.2307/3310111

Cited by 8 publications

(2 citation statements)

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“…They asserted that dividend had as much as four times the effect on share price compared to retained earnings. The proposition was corroborated by similar findings (Durand, 1955;Johnson et al, 1951;Fisher, 1961). However, it was Lintner's (1956) pioneering work on dividend payout that put forth the importance of firms' accord to it.…”

Section: Signaling Effectmentioning

confidence: 72%

Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?

Jawade

2021

JIBR

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Purpose This study aims to analyze the influence of firm characteristics in dividend payout in a concentrated ownership setting. Design/methodology/approach This study is probably the first to use the lasso technique for model selection and error prediction in the study of dividend payout in India. The lasso method comprises subsampling the available data set and performing reiterative regressions on those samples to generate the model with the best fit. This study incorporates four different ways of performing lasso treatment to get the best fit among them. Findings This study analyzes the influence of firm characteristics on dividend payout in the Indian context and asserts that firms with growth potential and earnings volatility do not hesitate to cut dividends. This study does not find evidence for signaling, agency cost and life cycle theories in a concentrated ownership setting. Earnings is the single most important factor to have a positive influence on dividend, while excessively leveraged firms are restrictive of dividend payout. Taxation has a prominent role in altering the way firms pay dividend. Research limitations/implications The recent changes in buyback taxation offer another opportunity to test the reactive behavior of firms. Also, given the disregard for traditional motivations, further research needs to be done to determine if dividend adjustments (on the lower side) help enhance firm value or not. Practical implications This study may help investors view dividends in a proper perspective. Firms give importance to investments over dividends and thus investors need not dwell on dividend changes if firms fulfill their growth potential. Social implications It lends perspective to investors about dividend changes and its importance. Originality/value The methodology used for analysis is absolutely original in the literature pertaining to dividend policy in the Indian context. The literature is abundant with theories advocating or opposing the eminence of dividend payout; however, this study takes a holistic view of all influential dividend determinants in literature to understand dividend payout.

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Section: Signaling Effectmentioning

confidence: 72%

Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?

Jawade

2021

JIBR

View full text Add to dashboard Cite

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“…Empirical studies, based on court case data, have used a variety of variables (see Rice, 1950;Johnson et al, 1951;Grunewald, 1961;Bosland, 1964;Englebrecht, 1976;Jensen, 1978;Lathen, 1982). Most relevant to this study is the work by Englebrecht, who constructed a multiple regression model containing nineteen independent variables which collectively explained 86.5% of the variation in court case valuations.…”

Section: Variable Selectionmentioning

confidence: 99%

Valuing unlisted shares: A dual approach to the major information determinants

Kantor

Pike

1987

Manage Decis Econ

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Lecturer, University of Bradford, UKLittle is known about how professional valuation experts actually form judgements on the value of unlisted shares. This study examines the valuation process among Canadian valuators and the relative importance of each of the main information variables used in that process. A dual approach to the problem is adopted: (1) a major survey of 231 valuation experts and (2) a conjoint analysis experiment on 82 valuators using fabricated cases representative of realistic relationships. Both approaches conclude that while earnings prospects is the single most important factor in determining unlisted share values, the determination of value in the absence of a capital market is a highly complex process involving a host of information variables, many of which do not easily lend themselves to objective judgement.

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The Determinants of the Value of Unlisted Shares: Opinions of Professional Valuers in Canada

Kantor¹,

Pike²

1987

Accounting and Business Research

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Valuation of Closely-Held Stock for Federal Tax Purposes: Approach to an Objective Method

Cited by 8 publications

References 0 publications

Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?

Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?

Valuing unlisted shares: A dual approach to the major information determinants

The Determinants of the Value of Unlisted Shares: Opinions of Professional Valuers in Canada

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