search query: @author McDonald, R. / total: 4
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| Author: | Lucas, D. McDonald, R. |
| Title: | Shareholder heterogeneity, adverse selection, and payout policy |
| Journal: | Journal of Financial and Quantitative Analysis
1998 : JUN, VOL. 33:2, p. 233-253 |
| Index terms: | FINANCIAL ANALYSIS SHAREHOLDERS ADVERSE SELECTION |
| Language: | eng |
| Abstract: | When shareholders have different plans to sell their shares, they will, in general, have different preferences concerning the firm's decision to pay out cash using dividends or share repurchase. The authors illustrate these different preferences and explore a model of payout policy that highlights the adverse selection costs of repurchases when managers have superior information about the value of the firm. The authors show that, in the absence of fixed costs to repurchasing shares, there is a separating equilibrium in which managers use taxable dividends to signal the quality of the firm. |
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