Hostname: page-component-848d4c4894-ndmmz Total loading time: 0 Render date: 2024-06-07T15:14:47.263Z Has data issue: false hasContentIssue false
  • English
  • Français

Dividend Policy and Increasing Discount Rates: A Clarification

Published online by Cambridge University Press:  19 October 2009

Robert C. Higgins
Get access Rights & Permissions [Opens in a new window]

Extract

For almost a decade, Myron Gordon has argued repeatedly that an enterprise's dividend policy can affect its share price [2, 3, and 4]. The essence of his argument is that risk-averse investors are likely to perceive current dividends as less risky than future ones. Consequently, a corporate decision to reduce current, in favor of increased future, dividends will reduce share prices, even when the funds are invested to yield the firm's cost of capital.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 7 , Issue 3 , June 1972 , pp. 1757 - 1762
Copyright
Copyright © School of Business Administration, University of Washington 1972

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

[1]Chen, H. “Valuation under Uncertainty.” Journal of Financial and Quantitative Analysis, September 1967, pp. 313–325.CrossRefGoogle Scholar
[2]Gordon, M.The Investment Financing and Valuation of the Corporation Homewood, Ill.: R. D. Irwin, 1962.Google Scholar
[3]Gordon, M. “Optimal Investment and Financing Policy.” Journal of Finance, May 1963, pp. 264–272.CrossRefGoogle Scholar
[4]Gordon, M. “The Savings, Investment and Valuation of the Corporation.” The Review of Economics and Statistics, February 1962, pp. 37–51.CrossRefGoogle Scholar
[5]Miller, M., and Modigliani, F.. “Dividend Policy, Growth and the Valuation of Shares.” Journal of Business, October 1961, pp. 411–433.CrossRefGoogle Scholar
[6]Robichek, A., and Myers, S.. Optimal Financing Decisions. Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1965.Google Scholar
[7]Robichek, A. “Valuation under Uncertainty: Comment.” Journal of Financial and Quantitative Analysis, December 1968, pp. 479–483.CrossRefGoogle Scholar
[8]Walter, J. “Dividend Policy: Its Influence on the Value of the Enterprise.” Journal of Finance, May 1963, pp. 280–291.CrossRefGoogle Scholar
[9]Van Home, J.Financial Management and Policy. Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1968.Google Scholar
[10]Van Home, J., and McDonald, J.. “Dividend Policy and New Equity Financing.” Journal of Finance, May 1971, pp. 507–519.CrossRefGoogle Scholar