Lintner's Model

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Lintner's Model

A model theorizing how a publicly-traded company sets its dividend policy. The model states that dividends are paid according to two factors. The first is the net present value of earnings, with higher values indicating higher dividends. The second is the sustainability of earnings; that is, a company may increase its earnings without increasing its dividend payouts until managers are convinced that it will continue to maintain such earnings.

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Lintner's observations

References in periodicals archive ?

(2012) examine the possible impact of the ownership structure of Malaysian public listed companies on dividend payout ratio for the year 2010 using Lintner model. Their findings suggest that the ownership concentration is in positive and significant relation with dividend payout ratio.

Corporate governance and dividend payout ratio in non-financial firms listed in Indonesian Stock Exchange

The Influence of Ownership Structure on the Firms Dividend Policy Based Lintner Model. International Review of Business Research Papers 8(6), 71-88.

IMPACT OF FOREIGN OWNERSHIP ON DIVIDEND POLICY IN POLAND

His findings were that the same factors affect both developed and developing countries and that the Lintner model holds true for firms in Jordan also.

Factors Determining the Dividend Policy of a Company

The empirical tests showed that the adjustment speed of the Lintner model is faster than the stock of capital adjustment.

On the Dynamic Interaction Between Dividend and Investment Decisions: Evidence from Tunisian Listed Firms

Following the Lintner model, dividends are the result of a partial adjustment of last year's dividends toward a target payout ratio.

Dividend policy in regulated network industries: evidence from the EU

The test of Lintner model reveals that the extent of dividend smoothing by firms in Hong Kong is significantly less than those in the U.S.

Dynamic determinants of dividend in affiliated and unaffiliated firms to government in Tehran Stock Exchange (TSE)

Myers, 2010, "A Lintner Model of Dividends and Managerial Rents," NBER Working paper.

Corporate payout policy, cash savings, and the cost of consistency: evidence from a structural estimation

The influence of ownership structure on the firms dividend policy based Lintner model, International Review of Business Research Papers 8(6): 71-88.

Ownership type influence on dividend payments in CEE countries

Garrett and Priestly (2000) worked on aggregate stock market data of US firms with extended Lintner model and claimed that target dividends are a function of permanent earnings and lagged prices.

Monetary policy restriction and dividend behaviour of Pakistani firms: an empirical analysis

This study extends the descriptive dividend literature by employing a variant of the Lintner model to investigate the association between dividend changes and the earnings and cash flow effects of LIFO adoption.

Dividend behavior surrounding LIFO adoption

Benartzi, Michaely, and Thaler (1997), among others, conclude that "Lintner's model of dividends remains the best description of the dividend setting process available." Accordingly, this paper considers the extent to which the Lintner model characterizes the repatriation policies of multinational affiliates, paying particular attention to how foreign earnings translate into dividends.

Dividend policy inside the multinational firm

Statistic DPS EPS Mean 0.234 0.663 Standard Deviation 0.514 2.574 Minimum 0.000 -0.673 Maximum 4.000 28.298 Table 6 Lintner Model Estimations The estimation results are based on the 660 firm-year observations.