And empirical research suggests that there is a link between high dividend pay-outs and good corporate governance.There are macroeconomic benefits as well, says Mr Kuijs.
Even the Institute of Directors, the bosses' club, is flabbergasted that Barclays has the nerve to hand out bonuses worth three times the dividend pay-out to shareholders.
George Osborne has received a dividend pay-out worth £1,230 from his family's wallpaper business, despite the company not paying any corporation tax for the last seven years, according to reports.
To compute future book values, we also need to make some assumptions about dividend pay-out.
It's a conventional wisdom in the stock market these days that dividend pay-outs are a waste of money.
The stock has gone ex-dividend, meaning that new shareholders will miss out on the last dividend pay-out.
But with the promise of a higher dividend pay-out, hefty job cuts and strong back-up reserves, there was some light at the end of the pipeline.
Due to a lack of more accurate data, we assume net dividends to constitute a constant ratio of expected earnings over the forecast horizon, with dividend pay-out ratio derived as a historical mean adjusted for unusual observations.
In other words, to take the annual dividend pay-outs in the case of shares, or the coupons in the case of bonds, but to leave the rest of the capital untouched.
