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EFFECTS OF AGENCY AND TRANSACTION COSTS ON DIVIDEND PAYOUT RATIOS: FURTHER EVIDENCE OF THE AGENCY‐TRANSACTION COST HYPOTHESIS
Author(s) -
Dempsey Stephen J.,
Laber Gene
Publication year - 1992
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1992.tb00115.x
Subject(s) - transaction cost , agency cost , dividend , dividend payout ratio , economics , agency (philosophy) , replicate , econometrics , inflation (cosmology) , database transaction , sample (material) , monetary economics , actuarial science , financial economics , dividend policy , statistics , finance , mathematics , corporate governance , computer science , philosophy , physics , chemistry , epistemology , chromatography , theoretical physics , shareholder , programming language
In this study we replicate and extend an agency‐transaction cost model of dividend payout previously hypothesized and supported in the literature. We find no statistical difference between the estimated regression model obtained for the original seven‐year sample period, 1974–80, and that obtained for our seven‐year period, 1981–87. The latter period is characterized by significantly lower inflation, stronger economic growth, and lower taxes. The intertemporal stability of the model suggests that it is useful for predicting dividend payout at the individual firm level.