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The information content of cash flows in dividend policy

Al-Najjar, Basil and Belghitar, Yacine (2012) The information content of cash flows in dividend policy. Economic Issues, 17 (2). pp. 57-70. ISSN 1363-7029

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Abstract

This paper aims to investigate the information content of cash flows in the context of dividend smoothing. Unlike previous studies, we propose a novel partial adjustment model based on cash flows, and compare it to Lintner's (1956) model. The results show that UK firms smooth their cash flows and that cash flows are the key determinant of dividend policy. Moreover, our proposed dividend partial adjustment model has a lower adjustment coefficient than Lintner's model, suggesting that our estimates are much closer to reality. The results are consistent across different measures of cash flows.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
Related URLs:
Depositing User: Basil Al-Najjar
Date Deposited: 14 Aug 2017 07:48
Last Modified: 14 Aug 2017 07:48
URI: http://eprints.hud.ac.uk/id/eprint/32797

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