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The information content of cash flows in dividend policy

Al-Najjar, Basil and Belghitar, Y. (2012) The information content of cash flows in dividend policy. Economic issues 17 , pp. 57-70. ISSN 1363-7029.

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This paper aims to investigate the information content of cash flows in the context of dividend smoothing. Unlike previous studies, we propose a novel partial adjustment model based on cash flows, and compare it to Lintner's (1956) model. The results show that UK firms smooth their cash flows and that cash flows are the key determinant of dividend policy. Moreover, our proposed dividend partial adjustment model has a lower adjustment coefficient than Lintner's model, suggesting that our estimates are much closer to reality. The results are consistent across different measures of cash flows.

Item Type: Article
School or Research Centre: Birkbeck Schools and Research Centres > School of Business, Economics & Informatics > Management
Depositing User: Dr Basil Al-Najjar
Date Deposited: 26 Oct 2012 09:53
Last Modified: 17 Apr 2013 12:25

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