Lintner Model
John Lintner's 1956 partial-adjustment model of dividend policy. Managers set a target payout ratio (typically 30-50% of long-run sustainable earnings); each period they close a fraction of the gap between current dividend and target (typically 25-50% per year). The model predicts that dividends are STICKY — smoothed across earnings cycles, raised only when management is confident, and rarely cut. Empirically validated across decades of CFO survey data (e.g., Brav-Graham-Harvey-Michaely 2005), Lintner remains the canonical descriptive model of corporate payout behavior.
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