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| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Optimal dividend policy with random interest rates |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of Mathematical Economics |
| Publisher | Elsevier |
| Geographical Reach | international |
| ISSN | 0304-4068 |
| Volume | 51 |
| Page Range | 93 - 101 |
| Date | 2014 |
| Abstract Text | Several recent papers have studied the impact of macroeconomic shocks on the financial policies of firms. However, they only consider the case where these macroeconomic shocks affect the profitability of firms but not the financial markets conditions. We study the polar case where the profitability of firms is stationary, but interest rates and issuance costs are governed by an exogenous Markov chain. We characterize the optimal dividend policy and show that these two macroeconomic factors have opposing effects: all things being equal, firms distribute more dividends when interest rates are high and less when issuing costs are high. |
| Official URL | http://www.sciencedirect.com/science/article/pii/S0304406814000093 |
| Digital Object Identifier | 10.1016/j.jmateco.2014.01.005 |
| Other Identification Number | merlin-id:9644 |
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