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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(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.
The Influence of Ownership Structure on the Firms Dividend Policy Based Lintner Model. International Review of Business Research Papers 8(6), 71-88.
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.
The empirical tests showed that the adjustment speed of the Lintner model is faster than the stock of capital adjustment.
Following the Lintner model, dividends are the result of a partial adjustment of last year's dividends toward a target payout ratio.
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.
Myers, 2010, "A Lintner Model of Dividends and Managerial Rents," NBER Working paper.
The influence of ownership structure on the firms dividend policy based Lintner model, International Review of Business Research Papers 8(6): 71-88.
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.
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.
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.
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.