The essential features of the Lintner model are that tax and nontax variables determine both the target payout ratios and the rates at which actual dividends adjust to desired dividends.
The coefficients in column 2 also imply that target payout ratios are a function of leverage, as firms with leverage ratios of one have target payout ratios of 70.
The evidence in Table VI indicates that the combination of high leverage and significant investment opportunities motivates firms to increase target payout ratios for their foreign affiliates.
In addition, while these companies have target payout ratios, they do not follow stable dividend policies.
Emerging market firms often do have a target payout ratio like their developed country counterparts, but they are generally less concerned with volatility in dividends over time and, consequently, dividend smoothing over time is less important" (Glen et al.
New distribution policy took effect in the quarter reducing target payout ratios
from 100% to a target range of 60-70%.
Firms prefer internal financing to external financing and will adapt their target payout ratios
to their investment opportunities.
The decrease in payout ratios in quintile 5 could have instead been driven by an adjustment toward the firm's respective long-term target payout ratios, which we would expect to be substantially lower than the relatively high (1.
3^ for quintile 5 suggest that the evidence is weaker with respect to a systematic downward adjustment of target payout ratios than indicated by the matched-pairs t-test results.