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
