IN making dividend decisions, the firm determines the division of earnings between reinvestment and distribution to stockholders. There are two general issues in the area of dividend policy: The first concerns the determinants of the firm's payout ratio (the ratio of dividends to earnings). The second issue concerns the intertemporal change of dividends. The focus of this paper is on the second issue. There are two prevailing views on the behavior of corporate dividend policies over time; the informational content and the partial adjustment hypothesis. In the following sections, both hypotheses are shown leading to empirically equivalent expressions. To avoid this confusion, we suggest an approach that would differentiate between the two hypotheses. Empirical results analyzing dividends behavior of twenty broad industry categories are summarized.

It is well established in the literature that financial development (FD) is conducive to growth, and yet the channels through which FD affects growth are not well understood. Using a unique new panel data set for 21 OECD countries over the past 140 years, this paper examines the extent to which FD transmits to growth through ideas production, savings, fixed investment, and schooling. Unionization and agricultural share are used as instruments for FD. The empirical results show that FD influences growth through all four channels. In particular, ideas production is found to be the most important channel through which FD affects growth.

Using data for six Asian miracle economies over the period from 1953 to 2006, this paper examines the extent to which growth has been driven by R&D and tests which second-generation endogenous growth model is most consistent with the data. The results give strong support to Schumpeterian growth theory but only limited support to semi-endogenous growth theory. Furthermore, it is shown that R&D has played a key role for growth in the Asian miracle economies.

Using a unique and rich database of high-technology firms in China, we show that effective enforcement of intellectual property rights at the provincial level is critical in encouraging financing and investing in R&D. Better enforcement of intellectual property (IP) rights positively affects firms' ability to acquire new external debt and allows firms to invest in more R&D, generate more innovation patents, and produce more sales from new products. Our results suggest that facilitating financing and investing in R&D are the channels through which better IP rights enforcement can affect economic growth.