Efficient Signalling with Dividends, Investment, and Stock Repurchases

Efficient Signalling with Dividends, Investment, and Stock Repurchases ABSTRACT The efficient mix of dissipative dividends, investments in real and financial assets, and repurchases of stock is computed for a continuum of firms with inside information about the return on risky real assets. In the efficient signalling equilibrium, the representative firm optimally distributes dividends, invests in risky real assets to maximize net present value, holds no financial securities, and sells new stock in the market. This firm finances its value‐maximizing investment first from internal funds and second from stock sold to new investors. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

Efficient Signalling with Dividends, Investment, and Stock Repurchases

The Journal of Finance, Volume 43 (3) – Jul 1, 1988

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Publisher
Wiley
Copyright
1988 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
D.O.I.
10.1111/j.1540-6261.1988.tb04605.x
Publisher site
See Article on Publisher Site

Abstract

ABSTRACT The efficient mix of dissipative dividends, investments in real and financial assets, and repurchases of stock is computed for a continuum of firms with inside information about the return on risky real assets. In the efficient signalling equilibrium, the representative firm optimally distributes dividends, invests in risky real assets to maximize net present value, holds no financial securities, and sells new stock in the market. This firm finances its value‐maximizing investment first from internal funds and second from stock sold to new investors.

Journal

The Journal of FinanceWiley

Published: Jul 1, 1988

References

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