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A class of solvable stochastic dividend optimization problems: on the general impact of flexibility on valuation
| Content Provider | Semantic Scholar |
|---|---|
| Author | Alvarez, Luis H. R. Virtanen, Jukka Tapio |
| Copyright Year | 2006 |
| Abstract | Summary.We consider the determination of an optimal dividend policy in the presence of cash flow uncertainty and transaction costs. We state a set of weak conditions under which the optimal dividend policy can be explicitly characterized for a broad class of diffusions modelling the underlying cash flow dynamics and demonstrate that increased dividend policy flexibility does not only increase the maximal expected cumulative present value of the future dividends, it also increases the rate at which this value grows (i.e. Tobin’s marginal q). We also prove that increased transaction costs result into larger but less frequent dividend payments. |
| Starting Page | 373 |
| Ending Page | 398 |
| Page Count | 26 |
| File Format | PDF HTM / HTML |
| DOI | 10.1007/s00199-005-0627-4 |
| Volume Number | 28 |
| Alternate Webpage(s) | http://www.doria.fi/bitstream/handle/10024/113605/Kre1_2004.pdf;jsessionid=09C0641214DF74AE72A4501509E484B9?sequence=1 |
| Alternate Webpage(s) | https://doi.org/10.1007/s00199-005-0627-4 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
