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Explain the two models of dividends (the outcome model and the substitution model) as outlined in LLSV (2000). What are the predictions of each model
Explain the two models of dividends (the outcome model and the substitution model) as outlined in LLSV (2000). What are the predictions of each model on a firm and a country level (Sketch the relevant diagrams if needed)? How did the authors carry the empirical strategy in order to test their predictions? What evidence did Faccio et al. (2000) found concerning European and Asian country? Explain.
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