Home > Research > Publications & Outputs > Do Capital Structure Models Square with the Dyn...

Research

Links

Text available via DOI:

View graph of relations

Do Capital Structure Models Square with the Dynamics of Payout?

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Published

Standard

Do Capital Structure Models Square with the Dynamics of Payout? / Chen, Shiqi; Lambrecht , Bart.
In: Annual Review of Financial Economics, Vol. 13, 30.11.2021, p. 271-299.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Chen, S & Lambrecht , B 2021, 'Do Capital Structure Models Square with the Dynamics of Payout?', Annual Review of Financial Economics, vol. 13, pp. 271-299. https://doi.org/10.1146/annurev-financial-010421-085556

APA

Chen, S., & Lambrecht , B. (2021). Do Capital Structure Models Square with the Dynamics of Payout? Annual Review of Financial Economics, 13, 271-299. https://doi.org/10.1146/annurev-financial-010421-085556

Vancouver

Chen S, Lambrecht B. Do Capital Structure Models Square with the Dynamics of Payout? Annual Review of Financial Economics. 2021 Nov 30;13:271-299. Epub 2021 Aug 2. doi: 10.1146/annurev-financial-010421-085556

Author

Chen, Shiqi ; Lambrecht , Bart. / Do Capital Structure Models Square with the Dynamics of Payout?. In: Annual Review of Financial Economics. 2021 ; Vol. 13. pp. 271-299.

Bibtex

@article{a147845e869e477ba48a707c0d56de1d,
title = "Do Capital Structure Models Square with the Dynamics of Payout?",
abstract = "We explore whether theoretically the target leverage and pecking-order models can be reconciled with payout smoothing. Investment absorbs a significant part of income and asset volatility if the firm follows both a payout target and a net debt ratio (NDR) target. A positive (negative) NDR amplifies (dampens) shocks in assets. Slow adjustment toward the NDR target facilitates payout smoothing. Under strict pecking-order financing, income shocks are absorbed primarily by changes in net debt. More payout smoothing implies a stronger negative relation between debt and net income. Shocks to assets in place need not affect current payout.",
author = "Shiqi Chen and Bart Lambrecht",
year = "2021",
month = nov,
day = "30",
doi = "10.1146/annurev-financial-010421-085556",
language = "English",
volume = "13",
pages = "271--299",
journal = "Annual Review of Financial Economics",
issn = "1941-1367",
publisher = "Annual Reviews Inc.",

}

RIS

TY - JOUR

T1 - Do Capital Structure Models Square with the Dynamics of Payout?

AU - Chen, Shiqi

AU - Lambrecht , Bart

PY - 2021/11/30

Y1 - 2021/11/30

N2 - We explore whether theoretically the target leverage and pecking-order models can be reconciled with payout smoothing. Investment absorbs a significant part of income and asset volatility if the firm follows both a payout target and a net debt ratio (NDR) target. A positive (negative) NDR amplifies (dampens) shocks in assets. Slow adjustment toward the NDR target facilitates payout smoothing. Under strict pecking-order financing, income shocks are absorbed primarily by changes in net debt. More payout smoothing implies a stronger negative relation between debt and net income. Shocks to assets in place need not affect current payout.

AB - We explore whether theoretically the target leverage and pecking-order models can be reconciled with payout smoothing. Investment absorbs a significant part of income and asset volatility if the firm follows both a payout target and a net debt ratio (NDR) target. A positive (negative) NDR amplifies (dampens) shocks in assets. Slow adjustment toward the NDR target facilitates payout smoothing. Under strict pecking-order financing, income shocks are absorbed primarily by changes in net debt. More payout smoothing implies a stronger negative relation between debt and net income. Shocks to assets in place need not affect current payout.

U2 - 10.1146/annurev-financial-010421-085556

DO - 10.1146/annurev-financial-010421-085556

M3 - Journal article

VL - 13

SP - 271

EP - 299

JO - Annual Review of Financial Economics

JF - Annual Review of Financial Economics

SN - 1941-1367

ER -