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The dividend pricing model : New evidence from the Korean housing market

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  • The dividend pricing model
  • Hwang , Min; Quigley, John M.; Son, Jae-young
  • Springer Science + Business Media


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Title The dividend pricing model
Similar Titles
Sub Title

New evidence from the Korean housing market

Material Type Articles
Author(English)

Hwang , Min; Quigley, John M.; Son, Jae-young

Publisher

[Heidelberg]:Springer Science + Business Media

Date 2006
Journal Title; Vol./Issue J Real Estate Finan Econ:(2006) 32
Pages 24
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Holding University of California, Berkeley

Abstract

It is generally conceded that dividend pricing models are poor predictors of asset prices. This finding is sometimes attributed to excess volatility or to a dividend process manipulated by firm managers. In this paper, we present rather powerful panel tests of the dividend pricing relation using a unique data set in which dividends are set by market forces independent of managers’ preferences. We rely on observations on the market for condominium dwellings in Korea—perhaps the only market in which information on dividends and prices is publicly and continuously available to consumers and investors. We extend the Bdividend-price ratio model^ to panels of housing returns and rents differentiated by type and location. We find broad support for the dividend pricing model during periods both before and after the Asian Financial Crisis of 1997–1998, suggesting that the market for housing assets in Korea has been remarkably efficient.