Multiple-Criteria Financial Planning Model of Public Utility Firms

The purposes of this study are to examine the determinants of the dividend, investment, liquidity, and financing decisions of public utility firms during the 1974–1979 period and develop a multiple-criteria financial planning model of a public utility firm as if these decisions were made in the imperfect markets environment in which the dividend and investment decisions are not independent. A multiple-criteria financial planning model can be developed and estimated for a public utility firm because utility firms seek to pay very high dividends and engage in large capital expenditures. The three stage least squares coefficients are inputs to the planning model and insights are gained by investigating the relative importance of minimizing the under-achievement of dividends, investment, and liquidity in the planning process.