Final Submission JMacro.pdf (567.43 kB)
Why are aggregate dividend payments procyclical?
journal contribution
posted on 2015-02-12, 10:54 authored by Winifred (Shih-Yun) Huang-Meier, Mark Freeman, Khelifa MazouzWe use two general equilibrium models to explain why changes in the external economic environment result in pro-cyclical aggregate dividend payout behavior. Both models that we consider endogenize low elasticity of investment. The first model incorporates capital adjustment costs, while the second one assumes that risk-averse managers maximize their own objective function rather than
1
shareholder wealth. We show that, while both models generate pro-cyclical aggregate dividends, a feature consistent with the observed business-cycle pattern of payouts from well-diversified portfolios, the second model provides a more likely explanation for this effect. Our findings emphasize the importance of incorporating agency conflicts when considering the relationship between the external economic environment and the financial behavior of businesses.
History
School
- Business and Economics
Department
- Business
Published in
Journal of MacroeconomicsVolume
ForthcomingIssue
1Pages
1 - 10 (10)Citation
HUANG-MEIER, W., FREEMAN, M. and MAZOUZ, K., 2015. Why are aggregate dividend payments procyclical? Journal of Macroeconomics, 44, pp.98-108.Publisher
© Elsevier Ltd.Version
- AM (Accepted Manuscript)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Publication date
2015Notes
This article was accepted for publication in the Journal of Macroeconomics [© Elsevier Ltd.] and the definitive version is available at: http://dx.doi.org/10.1016/j.jmacro.2015.01.005ISSN
1873-152XPublisher version
Language
- en