股利政策，信号和现金流量：综合办法[文献翻译].doc

1、原文DIVIDENDPOLICY,SIGNALINGANDFREECASHFLOWANINTEGRATEDAPPROACHRICHARDFAIRCHILDPURPOSESCHOLARSHAVEEXAMINEDTHEIMPORTANCEOFAFIRMSDIVIDENDPOLICYTHROUGHTWOCOMPETINGPARADIGMSTHESIGNALINGHYPOTHESISANDTHEFREECASHFLOWHYPOTHESISITHASBEENARGUEDTHATOURUNDERSTANDINGOFDIVIDENDPOLICYISHINDEREDBYTHELACKOFAMODELTHATI

2、NTEGRATESTHETWOHYPOTHESESTHEPURPOSEOFTHISPAPERISTOADDRESSTHISBYDEVELOPINGATHEORETICALDIVIDENDMODELTHATCOMBINESTHESIGNALINGANDFREECASHFLOWMOTIVESTHEOBJECTIVEOFTHEANALYSISISTOSHEDLIGHTONTHECOMPLEXRELATIONSHIPBETWEENDIVIDENDPOLICY,MANAGERIALINCENTIVESANDFIRMVALUEDESIGN/METHODOLOGY/APPROACHINORDERTOCONS

3、IDERTHECOMPLEXNATUREOFDIVIDENDPOLICY,ADIVIDENDSIGNALINGGAMEISDEVELOPED,INWHICHMANAGERSPOSSESSMOREINFORMATIONTHANINVESTORSABOUTTHEQUALITYOFTHEFIRMASYMMETRICINFORMATION,ANDMAYINVESTINVALUEREDUCINGPROJECTSMORALHAZARDHENCE,THEMODELCOMBINESSIGNALINGANDFREECASHFLOWMOTIVESFORDIVIDENDSFURTHERMORE,MANAGERIAL

4、COMMUNICATIONANDREPUTATIONEFFECTSAREINCORPORATEDINTOTHEMODELFINDINGSOFPARTICULARINTERESTISTHECASEWHEREAFIRMMAYNEEDTOCUTDIVIDENDSINORDERTOINVESTINANEWVALUECREATINGPROJECT,BUTWHERETHEFIRMWILLBEPUNISHEDBYTHEMARKET,SINCEINVESTORSAREBEHAVIOURALLYCONDITIONEDTOBELIEVETHATDIVIDENDCUTSAREBADNEWSTHISMAYRESULT

5、INFIRMSREFUSINGTOCUTDIVIDENDS,HENCEPASSINGUPGOODPROJECTSTHISPAPERDEMONSTRATESTHATMANAGERIALCOMMUNICATIONTOINVESTORSABOUTTHEREASONSFORTHEDIVIDENDCUT,SUPPORTEDBYMANAGERIALREPUTATIONEFFECTS,MAYMITIGATETHISPROBLEMREALWORLDEXAMPLESAREPROVIDEDTOILLUSTRATETHECOMPLEXITYOFDIVIDENDPOLICYORIGINALITY/VALUETHISW

6、ORKHASBEENINSPIREDBY,ANDDEVELOPSTHATOFFULLERANDTAKER,ANDFULLERANDBLAB,WHICHCONSIDERSTHESIGNALINGANDFREECASHFLOWMOTIVESFORDIVIDENDSWHEREASTHOSEAUTHORSCONSIDERTHECASEWHEREFIRMSONLYHAVENEWNEGATIVENETPRESENTVALUENPVPROJECTSAVAILABLESOTHATDIVIDENDINCREASESPROVIDEUNAMBIGUOUSLYPOSITIVESIGNALSTOTHEMARKETINB

7、OTHTHESIGNALINGANDFREECASHFLOWCASES,INTHISPAPERSMODEL,THESIGNALSMAYBEAMBIGUOUS,SINCEFIRMSMAYNEEDTOCUTDIVIDENDSTOTAKEPOSITIVENPVPROJECTSHENCE,THEMODELASSISTSINUNDERSTANDINGTHECOMPLEXITYOFDIVIDENDPOLICYINTRODUCTIONNEARLY50YEARSAFTERMILLERANDMODIGLIANIS1961FAMOUSDIVIDENDIRRELEVANCETHEOREM,ACADEMICSANDP

8、RACTITIONERSSTILLHAVELITTLEUNDERSTANDINGOFDIVIDENDPOLICYANDITSEFFECTONFIRMVALUEINDEED,BLACK1976OBSERVED,THEHARDERWELOOKATTHEDIVIDENDPICTURE,THEMOREITSEEMSLIKEAPUZZLE,WITHPIECESTHATJUSTDONTFITTOGETHERINTHISPAPER,WEDEVELOPADIVIDENDSIGNALINGMODELTHATATTEMPTSTOANALYSESTHEVARIOUSFACTORSTHATAFFECTDIVIDEND

9、POLICYANDFIRMVALUEACCORDINGTOMILLERANDMODIGLIANIS1961THEOREM,THEVALUEOFTHEFIRMISUNAFFECTEDBYITSDIVIDENDPOLICYINAWORLDOFPERFECTMARKETCONDITIONSTWOMAJORASSUMPTIONSDRIVINGTHEMMIRRELEVANCETHEOREMWERETHAT1AFIRMSMANAGEMENTISPURELYINTERESTEDINMAXIMIZINGSHAREHOLDERVALUETHEREARENOAGENCYPROBLEMS2CORPORATEINSI

10、DERSANDOUTSIDERSSHARETHESAMEINFORMATIONABOUTTHEFIRMSOPERATIONSANDPROSPECTSTHESYMMETRICINFORMATIONASSUMPTIONSUBSEQUENTTHEORETICALRESEARCHHASANALYZEDTHEEFFECTSOFINCORPORATINGASYMMETRICINFORMATIONANDAGENCYPROBLEMSINTOTHEFIRMSDIVIDENDDECISIONTHISRESULTEDINTWOCOMPETINGAPPROACHESTHEDIVIDENDSIGNALINGHYPOTH

11、ESIS,ANDTHEEXCESSCASHHYPOTHESISOURDIVIDENDMODELINCORPORATESBOTHAPPROACHESTHESIGNALINGHYPOTHESISSTATESTHATUNDERASYMMETRICINFORMATIONBETWEENMANAGERSANDINVESTORS,DIVIDENDPOLICYMAYPROVIDESIGNALSREGARDINGTHEFIRMSCURRENTPERFORMANCEANDFUTUREPROSPECTSTHEFREECASHFLOWHYPOTHESISALSOKNOWNASTHEEXCESSCASHHYPOTHES

12、ISSTATESTHATDIVIDENDPOLICIESADDRESSAGENCYPROBLEMSBETWEENMANAGERSANDOUTSIDEINVESTORSFOREXAMPLEEASTERBROOK,1984JENSEN,1986FLUCK,1995INPARTICULAR,THEAGENCYPROBLEMINJENSENS1986ANALYSISARISESFROMANEMPIREBUILDINGMANAGERSINCENTIVESTOINVESTINNEGATIVENETPRESENTVALUENPVPROJECTSDIVIDENDSALLEVIATETHISPROBLEMBYR

13、EDUCINGTHEFREECASHFLOWAVAILABLETOTHEMANAGERASNOTEDBYFULLERANDTHAKOR2002,BOTHOFTHESEHYPOTHESESSIGNALINGANDFREECASHFLOWSUPPORTMUCHBUTNOTALLOFTHEEMPIRICALEVIDENCETHATDIVIDENDINCREASESDECREASESAREGOODBADNEWS,CAUSINGSTOCKPRICEINCREASESDECREASESPERHAPSTHEREASONWHYASOLUTIONTOBLACKS1976DIVIDENDPUZZLEREMAINS

14、SOELUSIVEISTHATWELACKANINTEGRATEDTHEORYTHATINCORPORATESBOTHTHESIGNALINGANDFREECASHFLOWMOTIVATIONSFORDIVIDENDSFULLERANDTHAKOR2002FULLERANDBLAU,2010FULLERANDTHAKOR2002SKETCHTHEFIRSTSUCHINTEGRATEDMODELWEBUILDONTHEIRWORKBYDEVELOPINGADIVIDENDMODELTHATINCORPORATESBOTHASYMMETRICINFORMATIONANDFREECASHFLOWPR

15、OBLEMSPARTICULARLY,WECONSIDERADUALROLEFORDIVIDENDSDIVIDENDSMAYPROVIDEASIGNALOFCURRENTINCOMETOINVESTORSHENCETHEMANAGERISMOTIVATEDTOCHOOSEAHIGHDIVIDENDTOPROVIDEAPOSITIVESIGNALHOWEVER,INOURANALYSIS,ANEWPROJECTISAVAILABLETOTHEFIRMIFTHEFIRMWISHESTOINVESTINTHISPROJECT,ITMUSTGETTHEFUNDSFROMCURRENTINCOMEHEN

16、CE,INADDITIONTOTHECURRENTINCOMESIGNALINGROLE,THELEVELOFDIVIDENDSMAYALSOAFFECTTHEMANAGERSABILITYTOINVESTINTHENEWPROJECTHENCE,THEMANAGERMAYWISHTOCUTDIVIDENDSTOTAKEAGOOD,VALUEADDINGPROJECT,ORHEMAYWISHTOPAYOUTHIGHDIVIDENDSTOREDUCETHEFREECASHFLOWINORDERTOCOMMITNOTTOTAKEABAD,VALUEREDUCINGPROJECTOURMODELCO

17、NTRIBUTESTOFULLERANDTHAKORSFT2002ANALYSISINTHEFOLLOWINGWAYSFIRST,WEDEVELOPTHEANALYSIS,ANDDERIVETHEEQUILIBRIUMOFTHEDIVIDENDGAME,INAFORMALANDRIGOROUSMANNERSECOND,FTONLYCONSIDERSTHEPOSSIBILITYTHATANEGATIVENPVPROJECTEXISTSHENCE,THEYFOCUSONJENSENS1986FREECASHFLOWPROBLEMINCONTRAST,WECONSIDERTHEPOSSIBILITY

18、THATTHEPROJECTMAYHAVEANEGATIVEORPOSITIVENPVTHISENABLESUSTOCONSIDERTHEFOLLOWINGUNDERRESEARCHEDAREAALTHOUGHTHEMAJORITYOFTHEORETICALANDEMPIRICALWORKSUGGESTSTHATTHERELATIONSHIPBETWEENDIVIDENDSANDSHAREPRICEISPOSITIVEDIVIDENDINCREASESAREGOODNEWS,WOOLDRIDGEANDGHOSH1998HAVESUGGESTEDTHAT,WHENAFIRMHASSTRONGGR

19、OWTHOPPORTUNITIESAVAILABLE,DIVIDENDCUTSMAYNOTALWAYSBEBADNEWSCONVERSELY,DIVIDENDINCREASESMAYBEBADNEWSFOREXAMPLE,ALLENANDMICHAELY2002ARGUE,HOWEVER,WENOTETHATWITHASYMMETRICINFORMATION,DIVIDENDSCANALSOBEVIEWEDASBADNEWSFIRMSTHATPAYDIVIDENDSARETHEONESTHATHAVENOPOSITIVENPVPROJECTSINWHICHTOINVEST,ANDACCORDI

20、NGTOBLACK1976,PERHAPSACORPORATIONTHATPAYSNODIVIDENDSISDEMONSTRATINGCONFIDENCETHATITHASATTRACTIVEINVESTMENTOPPORTUNITIESTHATMIGHTBEMISSEDIFITPAIDDIVIDENDSHENCE,THERELATIONSHIPBETWEENDIVIDENDSANDFIRMVALUEISCOMPLEXTHEMARKETMAYVIEWANINCREASEINDIVIDENDSFAVORABLY,EITHERASAPOSITIVESIGNALOFCURRENTINCOMETHAT

21、ISDIVIDENDSREDUCEASYMMETRICINFORMATIONPROBLEMS,ORASAMEANSOFMITIGATINGFREECASHFLOWPROBLEMSTHATISDIVIDENDSREDUCEAGENCYPROBLEMSHOWEVER,ADIVIDENDINCREASEMAYBESEENASANEGATIVESIGNALTHEFIRMLACKSGROWTHOPPORTUNITIES,WHILEADIVIDENDCUTMAYBESEENASAPOSITIVESIGNALTHEFIRMHASSIGNIFICANTGROWTHOPPORTUNITIESAVAILABLEO

22、URINTEGRATEDSIGNALING/EXCESSCASHFLOWMODELOFDIVIDENDSATTEMPTSTOANALYSESALLOFTHESEAFFECTSOURTHIRDCONTRIBUTIONISTOCONSIDERTWOTYPESOFINEFFICIENCYORAGENCYPROBLEMRELATINGTOMANAGERIALINCENTIVESREGARDINGDIVIDENDPOLICYFIRSTLY,WEANALYSESAMORALHAZARDPROBLEMINWHICHEMPIREBUILDINGMANAGERSMAYCUTDIVIDENDSINORDERTOI

23、NVESTINANEGATIVEVALUEREDUCINGNPVPROJECTDUETOMANAGERIALPRIVATEBENEFITSSECONDLY,WECONSIDERANADVERSESELECTIONPROBLEM,WHEREBYMANAGERSMAYREFUSETOCUTDIVIDENDS,HENCEPASSINGUPAPOSITIVENPVPROJECT4INDEED,COHENANDYAGIL2006IDENTIFYANEWTYPEOFAGENCYCOSTOFDIVIDENDTHESUMOFPOSITIVENPVPROJECTSTHATAREABANDONEDINORDERT

24、OPAYDIVIDENDSFRANKFURTERANDWOOD2002OBSERVETHAT,INADDITIONTOANALYZINGTHEEFFECTSOFAGENCYANDASYMMETRICINFORMATIONPROBLEMSONDIVIDENDPOLICY,RESEARCHERSAREBEGINNINGTOCONSIDERBEHAVIORALMODELSTHEYOBSERVETHAT,INVESTORBEHAVIORISSUBSTANTIALLYINFLUENCEDBYSOCIETALNORMSANDATTITUDESACCORDINGTOSHILLER1989,INCLUDING

25、THESEINFLUENCESINMODELINGEFFORTSCANENRICHTHEDEVELOPMENTOFATHEORYTOEXPLAINTHEENDURANCEOFCORPORATEDIVIDENDPOLICYOURFOURTHCONTRIBUTIONISTHATWEINCLUDEABEHAVIORALDIMENSIONINOURMODELTHATIS,WECONSIDERINVESTORSWHOHAVEBEENCONDITIONEDTOBELIEVETHATHIGHDIVIDENDSSIGNALHIGHQUALITYINOURFIRSTCASE,THEINVESTORSBELIEF

26、SAREINDEEDCORRECT,ASTHEHIGHQUALITYFIRMCANSEPARATEFROMTHELOWQUALITYFIRMBYPAYINGAHIGHDIVIDENDINTHESECONDCASE,THESEBELIEFSDRIVETHEADVERSESELECTIONPROBLEMTHEHIGHQUALITYFIRMISUNWILLINGTOREDUCETHEDIVIDENDBELOWTHATOFTHELOWQUALITYFIRM,SINCETHEMARKETTHENMISTAKENLYVALUESTHISFIRMASLOWQUALITY6ASANEXTENSIONTOOUR

27、SECONDCASE,WECONSIDERWHETHERTHEADVERSESELECTIONPROBLEMCANBEMITIGATEDBYCOMMUNICATIONTOINVESTORS,REINFORCEDBYMANAGERIALREPUTATIONEFFECTSINDEED,WOOLDRIDGEANDGHOSH1998ARGUETHATFIRMSMAYBEABLETOAVOIDANEGATIVEMARKETREACTIONBYCOMMUNICATINGTOINVESTORSTHATTHEREASONFORDIVIDENDCUTSISTOINVESTINFUTUREGROWTHOPPORT

28、UNITIESITMAYBEARGUEDTHATTHISMAYBECHEAPTALKHOWEVER,WOOLDRIDGEANDGHOSHARGUETHATMANAGERIALREPUTATIONMAYPROVIDEANIMPORTANTMECHANISMFORPROVIDINGCREDIBILITYTOCORPORATEFINANCEDECISIONSTHEROLEOFREPUTATIONINDIVIDENDPOLICYHASBEENEXPLOREDBYBRUCATOANDSMITH1997ANDGILLETETAL2008INBRUCATOANDSMITH,AREPUTABLEDIVIDEN

29、DSIGNALISONEWHEREANUNEXPECTEDDIVIDENDINCREASEISCONFIRMEDBYASUBSEQUENTUNEXPECTEDEARNINGSINCREASESIMILARLY,INGILLETETAL,THEREPUTATIONMECHANISMISSUCHTHATTHEMARKETPUNISHESAFIRMTHATCHOOSESAHIGHDIVIDENDINORDERTOFOOLTHEMARKETTHATITISAHIGHINCOMEFIRM,BUTSUBSEQUENTLYREPORTSLOWPROFITABILITYINCONTRAST,INOURMODE

30、L,WECONSIDERTHEROLEOFMANAGERIALREPUTATIONINALLOWINGAFIRMTOCOMMUNICATETHATITISCUTTINGTHEDIVIDENDINORDERTOINVESTINANEWVALUEADDINGPROJECTTHEREMAINDEROFTHEPAPERISORGANIZEDASFOLLOWSINSECTION2,WEPRESENTOURMODELINSECTION21,WECONSIDEROURFREECASHFLOWCASEINSECTION22,WECONSIDEROURADVERSESELECTIONCASE,ANDCONSID

31、ERTHEROLEOFCOMMUNICATIONANDREPUTATIONINSECTION4,WEDISCUSSPRACTICALANDMANAGERIALIMPLICATIONSOFOURMODELFURTHERMORE,INTHELIGHTOFOURMODEL,WECONSIDERSOMEANECDOTALEVIDENCEDEMONSTRATINGTHECOMPLEXITIESSURROUNDINGDIVIDENDPOLICYSECTION5CONCLUDESOURDIVIDENDSIGNALINGMODELDEMONSTRATESTHATDIVIDENDPOLICYISINDEEDCO

32、MPLEXWEHAVEDEMONSTRATEDTHATHIGHDIVIDENDSMAYHAVEAPOSITIVEEFFECTONFIRMVALUE,BOTHBYPROVIDINGAPOSITIVESIGNALOFCURRENTPERFORMANCEINTERMSOFCURRENTINCOME,ANDINREDUCINGTHEFREECASHFLOWPROBLEMTHATIS,THETEMPTATIONFORTHEMANAGERTOINVESTINNEGATIVENPVPROJECTSDUETOPRIVATEBENEFITSHOWEVER,WHENGOODPOSITIVENPVINVESTMEN

33、TOPPORTUNITIESAREAVAILABLE,AHIGHDIVIDENDMAYINDEEDBEVALUEREDUCINGIFITPREVENTSFIRMSFROMBEINGABLETOMAKETHESEINVESTMENTSHOWEVER,MANAGEMENTMAYREFUSETOCUTDIVIDENDS,THEREBYPASSINGUPTHESEPOSITIVENPVOPPORTUNITIES,ESPECIALLYIFTHESTOCKMARKETHASBEENCONDITIONEDTOBELIEVETHATHIGHDIVIDENDSSIGNALAHIGHQUALITYFIRMOURM

34、ODELTHUSEMPHASIZEDMANAGERIALCOMMUNICATION/EDUCATIONOFINVESTORS,SUPPORTEDBYMANAGERIALREPUTATIONCONSIDERATIONS,ASAMEANSOFELIMINATINGTHISPROBLEMWENOWCONSIDERSOMEANECDOTALEVIDENCETHATPROVIDESAPRACTICALPERSPECTIVETOOURTHEORY,ANDDEMONSTRATESTHEREALWORLDCONFUSIONSURROUNDINGDIVIDENDPOLICYTHETRADITIONALPOSIT

35、IVERELATIONSHIPBETWEENDIVIDENDSANDFIRM41VALUELEASEETAL2000PROVIDETHEFOLLOWINGEXAMPLESWHERETHEMARKETREACTEDINTHESTANDARDWAY,THATIS,POSITIVELYNEGATIVELYTODIVIDENDINCREASESDECREASESFIGGIEINTERNATIONALANNOUNCEDACUTINITSQUARTERLYDIVIDENDONTHEANNOUNCEMENTFIGGIESSTOCKPRICEDECLINEDBETHLEHEMSTEELCORPORATIONA

36、NNOUNCEDTHATITWASOMITTINGITSQUARTERLYDIVIDENDITSSHAREPRICEFELLWALMARTSTORESANNOUNCEDANINCREASEINITSQUARTERLYDIVIDENDWALMARTSSHAREPRICEINCREASEDPROCTERANDGAMBLECOMPANYANNOUNCEDANANNUALDIVIDENDINCREASEONTHEANNOUNCEMENT,PANDGSSHAREPRICEINCREASEDHOWEVER,LEASEETAL2000DEMONSTRATETHATMANAGEMENTUNDERSTANDST

37、HATHIGHDIVIDENDSMAYRESTRICTCORPORATEINVESTMENTINVALUECREATIONELISABETHGOTH,ADISSIDENTMEMBEROFTHEFAMILYTHATCONTROLSDOWJONESANDCO,RAISESQUESTIONSABOUTITSDIVIDENDPOLICY,CONTENDINGTHATDOWJONESHASINCREASEDITSDIVIDENDSATTHEEXPENSEOFREINVESTINGITSEARNINGSTOFUELFUTUREGROWTHHOWEVER,SHAREHOLDERSWHOENJOYEDSTOC

38、KRUNUPSANDRISINGDIVIDENDSINTHE1980SAREUNHAPPYTHATBELLCEOSWANTTOCURBDIVIDENDGROWTHANDUSEPROFITSTOIMPROVETHEIRNETWORKSANDDIVERSIFYATHOMEANDABROADTHISSUGGESTSTHATINVESTORSMAYUNDERSTANDTHATDIVIDENDSMAYNEEDTOBECUTTOINVESTINCOMPANYGROWTH,BUTTHEYSTILLDEMANDDIVIDENDSDIVIDENDCUTSARENOTALWAYSBADNEWSOURANALYSI

39、SREVEALEDTHATDIVIDENDCUTSARENOTALWAYSBADNEWS,ESPECIALLYWHENAFIRMHASSIGNIFICANTGROWTHOPPORTUNITIESAVAILABLEHOWEVER,WEDEMONSTRATEDTHATMANAGERSMAYREFUSETOCUTDIVIDENDSFORFEAROFNEGATIVEMARKETREACTIONWHICHMAYBEDRIVENBYINVESTORSBEINGBEHAVIORALLYCONDITIONEDTOBELIEVETHATDIVIDENDCUTSAREBADNEWSOURMODELSUGGESTE

40、DTHATTHEPROBLEMMAYBEMITIGATEDIFMANAGERSCANCOMMUNICATETHEREASONSFORDIVIDENDCUTSTOINVESTINNEWVALUEADDINGPROJECTS,SUPPORTEDBYMANAGERIALREPUTATIONEFFECTSINDEED,COHENANDYAGILS2006INTERNATIONALSURVEYOFCFOSOFMAJORCOMPANIESINUSA,UK,GERMANY,CANADAANDJAPANREVEALSTHATTHISAGENCYPROBLEMEXISTSTHEAUTHORSARGUETHATM

41、ANAGERSSHOULDCONSIDERTWOFACTORSWHENDECIDINGWHETHERTOCUTDIVIDENDS1HOWSENSITIVEISTHESTOCKPRICETODIVIDENDCHANGESTHEADVERSESELECTIONPROBLEM2TOWHATEXTENTCANMANAGERSTRANSFERINFORMATIONTHATISCOMMUNICATEABOUTTHEPROFITABLEINVESTMENTOPPORTUNITYSOTHATINVESTORSWILLUNDERSTANDTHEREASONFORTHEDIVIDENDINCREASEINDEED

42、,THEYSTATEIFTHEMANAGERSBELIEVETHATTHEREASONFORTHEDIVIDENDCUTCANBEEFFECTIVELYCOMMUNICATEDTOINVESTORSINSUCHAMANNERTHATITWOULDNOTRESULTINADRAMATICSTOCKPRICEDECREASE,THENTHEYSHOULDPREFERINVESTINGOVERPAYINGTHEFULLAMOUNTOFTHEDIVIDENDONTHEOTHERHAND,IFTHEYBELIEVETHATADRASTICDECLINEINTHESTOCKPRICEMAYOCCUR,TH

43、ENTHEYSHOULDCONTINUEWITHTHENORMALDIVIDENDPLANANDPOSTPONETHEINVESTMENTOPPORTUNITYTHEFLOWOFINFORMATIONFACTORSHOULDBEDERIVEDFROMTHESTRUCTURALINVESTORSRELATIONSNETWORKSANDFROMPASTEXPERIENCELEASEETALCONSIDERTWOEXAMPLESOFFIRMSCHANGINGTHEIRDIVIDENDPOLICYWINDERMEREDURABLEHOLDINGS,INC,ANDCOMPAQCOMPUTERCORPOR

44、ATIONWINDERMEREDURABLEHOLDINGS,INC,ANNOUNCEDTHATITWASCUTTINGTHEDIVIDENDINORDERTOREINVESTALLEARNINGSINTOTHEBUSINESS,FOLLOWINGAREEVALUATIONOFITSDIVIDENDPOLICYINLIGHTOFTHECOMPANYSSTRATEGICREPOSITIONINGFORGROWTHANDTHERESULTINGCASHREQUIREMENTONTHERELEASEOFTHEDIVIDENDCUTANNOUNCEMENT,THEFIRMSSHAREPRICEINCR

45、EASEDFROM1825TO1900HENCE,THEDIVIDENDCUT,SUPPORTEDBYPOSITIVECOMMUNICATIONTOTHEMARKET,WASSEENASGOODNEWSINCONTRAST,COMPAQCOMPUTERCORPORATIONPAIDADIVIDENDFORTHEFIRSTTIMEIN1997,CAUSINGITSSHAREPRICETOFALLADIVIDENDINITIATIONWASSEENASABADNEWSSIGNALTHATTHECOMPANYHADRUNOUTOFGOODINVESTMENTOPPORTUNITIESWOOLDRID

46、GEANDGHOSH1998EMPHASIZETHEIMPORTANCEOFCORPORATECOMMUNICATIONANDMANAGERIALREPUTATIONWHENCUTTINGDIVIDENDSTOINVESTINGROWTHTHEYCOMPARETHECASESOFGOULDINCANDITTIN1983,GOULDINCANNOUNCEDTHATITWASCUTTINGITSQUARTERLYDIVIDENDINORDERTOCONSERVECASHTHATCANBEUSEDTOFINANCETHEGROWTHOFITSELECTRONICBUSINESSESTHEBOARDS

47、ETTHENEWDIVIDENDINTHELIGHTOFTHECOMPANYSTRANSITIONTOAHIGHTECHNOLOGYFIRMONTHEDAYOFTHEANNOUNCEMENT,ITSSHAREPRICEINCREASEDINCONTRAST,ITTANNOUNCEDA64PERCENTCUTINITSDIVIDENDPAYMENT,EXPLAININGTHATITSDIVIDENDLEVELHADBECOMEINCONSISTENTWITHTHEINTENSELYCOMPETITIVEHIGHTECHNOLOGYENVIRONMENTITTSSHAREPRICEFELLCONC

48、LUSIONWEHAVEDEVELOPEDADIVIDENDSIGNALINGMODELTHATBEGINSTOADDRESSFISHERBLACKS1976DIVIDENDPUZZLEWEDEMONSTRATEDTHATTHERELATIONSHIPBETWEENMANAGERIALINCENTIVES,DIVIDENDPOLICYANDFIRMVALUEISINDEEDCOMPLEXINOURMODEL,DIVIDENDSSERVEDADUALPURPOSETHEYSIGNALEDCURRENTINCOME,ANDTHEYAFFECTEDTHEFIRMSABILITYTOINVESTINN

49、EWPROJECTSWETHEREFOREARGUEDTHATDIVIDENDSMAYPROVIDECONFUSINGSIGNALSTOINVESTORS,WHOMAYVIEWANINCREASEINDIVIDENDSFAVORABLY,EITHERASAPOSITIVESIGNALOFCURRENTINCOMETHATISDIVIDENDSREDUCEASYMMETRICINFORMATIONPROBLEMS,ORASAMEANSOFMITIGATINGFREECASHFLOWPROBLEMSTHATISDIVIDENDSREDUCEAGENCYPROBLEMSHOWEVER,ADIVIDENDINCREASEMAYBESEENASANEGATIVESIGNALTHEFIRMLACKSGROWTHOPPORTUNITIES,WHILEADIVIDENDCUTMAYBESEENASAPOSITIVESIGNALTHEFIRMHASSIGNIFICANTGROWTHOPPORTUNITIESAVAILABLEOURMODELIDENTIFIEDTWOPOTENTIALAGENCYPROBLEMSASSOCIATEDWITHDIVIDENDPOLICYFIRST,THEMANAGERMAYCU