John Lintner
John Virgil Lintner, Jr. (February 9, 1916 – June 8, 1983) was a professor at the Harvard Business School in the 1960s and one of the co-creators (1965 a, b) of the capital asset pricing model. For a time, much confusion was created because the various economists working on this model independently failed to realize that they were saying much the same thing. They looked at the issue of capital asset valuation from different perspectives. William F. Sharpe, for example, approached the problem as an individual investor picking stocks. Lintner, on the other hand, approached it from the  perspective of a corporation issuing shares of stock. Lintner was also known for a 1983 presentation he gave to the Financial Analysts Federation. For the first time he presented what has become known as the "Lintner Paper," formally titled “The Potential Role of Managed Commodity-Financial Futures Accounts (and/or Funds) in Portfolios of Stocks and Bonds.” Lintner's research combined a volatile asset, managed futures CTAs, with another volatile asset, stocks, to reduce overall portfolio volatility and improve returns. For NonCorrelated investors LIntner's work was a foundational milestone that has been used to advance this investment discipline. Lintner earned  his bachelor's degree from the University of Kansas in 1939. He arrived at Harvard for graduate study the next year. He quickly impressed the faculty, and in 1942 became a member of the Society of Fellows, a three-year paid fellowship with no duties except self-directed research. Personal life. John Lintner was born to John Virgil and Pearl Lintner in Lone Elm, KS on February 9, 1916. From his first marriage to Sylvia Chace, he had two children, John Howland and Nancy Chace. From his second marriage to Eleanor Hodges, he had a stepson, Allan Hodges. Lintner died  of a heart attack while driving on June 8, 1983 in Cambridge, MA. Education. He received an A.B., in 1939 and a M.A., in 1940 from the University of Kansas; a M.A., in 1942; and Ph.D., in 1946 from Harvard University. Lintner's dividend policy model. Lintner's dividend policy model is a model theorizing how a publicly-traded company sets its dividend policy. The logic is that every company wants to maintain a constant rate of dividend even if the results in a particular period are not up to the mark. The assumption is that investors will prefer to  receive a certain dividend payout. The model states that dividends are paid according to two factors. The first is the net present value of earnings, with higher values indicating higher dividends. The second is the sustainability of earnings; that is, a company may increase its earnings without increasing its dividend payouts until managers are convinced that it will continue to maintain such earnings. The theory was adopted based on observations that many companies will set their long-run target dividends-to-earnings ratios based upon the amount of positive net-present-value projects that they have available. The model then  uses two parameters, the target payout ratio and the speed where current dividends adjust to that target: where: When applying its model to U.S. stocks, Lintner found formula_15 and formula_16.