A Lintner Model of Payout and Managerial Rents
We develop a dynamic agency model in which payout, investment, and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout to smooth their flow of rents. Total payout (dividends plus net repurc...
| Main Authors: | , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
| Published: |
John Wiley & Sons, Inc
2014
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| Online Access: | http://hdl.handle.net/1721.1/88014 https://orcid.org/0000-0003-0813-4727 |
| _version_ | 1811073124233379840 |
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| author | Lambrecht, Bart M. Myers, Stewart C. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Lambrecht, Bart M. Myers, Stewart C. |
| author_sort | Lambrecht, Bart M. |
| collection | MIT |
| description | We develop a dynamic agency model in which payout, investment, and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout to smooth their flow of rents. Total payout (dividends plus net repurchases) follows Lintner’s (1956) target adjustment model. Payout smooths out transitory shocks to current income and adjusts gradually to changes in permanent income. Smoothing is accomplished by borrowing or lending. Payout is not cut back to finance capital investment. Risk aversion causes managers to underinvest, but habit formation mitigates the degree of underinvestment. |
| first_indexed | 2024-09-23T09:28:49Z |
| format | Article |
| id | mit-1721.1/88014 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T09:28:49Z |
| publishDate | 2014 |
| publisher | John Wiley & Sons, Inc |
| record_format | dspace |
| spelling | mit-1721.1/880142022-09-26T11:39:06Z A Lintner Model of Payout and Managerial Rents Lambrecht, Bart M. Myers, Stewart C. Sloan School of Management Myers, Stewart C. We develop a dynamic agency model in which payout, investment, and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout to smooth their flow of rents. Total payout (dividends plus net repurchases) follows Lintner’s (1956) target adjustment model. Payout smooths out transitory shocks to current income and adjusts gradually to changes in permanent income. Smoothing is accomplished by borrowing or lending. Payout is not cut back to finance capital investment. Risk aversion causes managers to underinvest, but habit formation mitigates the degree of underinvestment. Economic and Social Research Council (Great Britain) (grant RES-062-23-0078) 2014-06-17T15:38:17Z 2014-06-17T15:38:17Z 2012-10 Article http://purl.org/eprint/type/JournalArticle 00221082 http://hdl.handle.net/1721.1/88014 LAMBRECHT, BART M., and STEWART C. MYERS. “A Lintner Model of Payout and Managerial Rents.” The Journal of Finance 67, no. 5 (October 2012): 1761–1810. https://orcid.org/0000-0003-0813-4727 en_US http://dx.doi.org/10.1111/j.1540-6261.2012.01772.x Journal of Finance Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf John Wiley & Sons, Inc SSRN |
| spellingShingle | Lambrecht, Bart M. Myers, Stewart C. A Lintner Model of Payout and Managerial Rents |
| title | A Lintner Model of Payout and Managerial Rents |
| title_full | A Lintner Model of Payout and Managerial Rents |
| title_fullStr | A Lintner Model of Payout and Managerial Rents |
| title_full_unstemmed | A Lintner Model of Payout and Managerial Rents |
| title_short | A Lintner Model of Payout and Managerial Rents |
| title_sort | lintner model of payout and managerial rents |
| url | http://hdl.handle.net/1721.1/88014 https://orcid.org/0000-0003-0813-4727 |
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