Revisiting the dividend puzzle. Do all of the pieces now fit?

Review of Financial Economics

Volumn 11, Issue 4, 2002, Pages 241-261

  Baker, H Kent ^a   Powell, Gary E ^b   Veit, E Theodore ^c  

^a AMERICAN UNIVERSITY   (United States)

^b TOWSON UNIVERSITY   (United States)

^c ROLLINS COLLEGE   (United States)

Author keywords

Behavioral finance; Cash dividends; Dividend policy

Indexed keywords

EID: 0036421348     PISSN: 10583300     EISSN: None     Source Type: Journal    
DOI: 10.1016/S1058-3300(02)00044-7     Document Type: Article

References (100)

1. Agrawal, A., & Jayaraman, N. (1994). The dividend policies of all-equity firms: a direct test of the free cash flow theory. Managerial Decision Economics, 15, 139-148.
2. Aharony, J., & Dotan, A. (1994). Regular dividend announcements and future unexpected earnings: an empirical analysis. Financial Review, 29, 125-151.
3. Aharony, J., & Swary, I. (1980). Quarterly dividend and earnings announcements and stockholders' returns: an empirical analysis. Journal of Finance, 35, 1-12.
4. Allen, F., Bernardo, A. E., & Welch, I. (2000). The theory of dividends based on tax clienteles. Journal of Finance, 55, 2499-2536.
5. Allen, F., & Michaely, R. (1995). Dividend policy. In R. A. Jarrow, V. Maksimovic, & W. T. Ziemba (Eds.), Handbooks in operations research and management science. Finance, vol. 9 (pp. 793-839). Amsterdam: Elsevier.
6. Ambarish, R., John, K., & Williams, J. (1987). Efficient signaling with dividends and investments. Journal of Finance, 42, 321-344.
7. Ang, J.S. (1987). Do dividends matter? A review of corporate dividend theories and evidence. New York: Salomon Brothers Center for the Study of Financial Institutions and the Graduate School of Business Administration, New York University.
8. Asquith, P., & Mullins, D. (1983). The impact of initiating dividend payments on shareholder wealth. Journal of Business, 56, 77-96.
9. Bagwell, L., & Shoven, J. (1989). Cash distributions to shareholders. Journal of Economic Perspectives, 3, 129.
10. Baker, H. K., & Farrelly, G. E. (1988). Dividend achievers: a behavioral look. Akron Business and Economic Review, 19, 79-92.
11. Baker, H. K., Farrelly, G. E., & Edelman, R. B. (1985). A survey of management views on dividend policy. Financial Management, 22, 78-84.
12. Baker, H. K., Gallagher, P. L., & Morgan, K. E. (1981). Management's view of stock repurchase programs. Journal of Financial Research, 4, 233-247.
13. Baker, H. K., & Powell, G. E. (1999). How corporate managers view dividend policy. Quarterly Journal of Business and Economics, 38, 17-35.
14. Baker, H. K., Powell, G. E., & Veit, E. T. (2002). Why companies use open-market repurchases: a managerial perspective. Quarterly Review of Economics and Finance, (in press).
15. Baker, H. K., Veit, E. T., & Powell, G. E. (2001). Factors influencing dividend policy decisions of Nasdaq firms. Financial Review, 38, 19-39.
16. Barclay, M., & Smith Jr., C. (1988). Corporate payout policy: cash dividends versus open-market repurchases. Journal of Financial Economics, 22, 61-82.
17. Bartov, E., Krinsky, I., & Lee, J. (1998). Evidence on how companies choose between dividends and open-market stock repurchases. Journal of Applied Corporate Finance, 11, 89-96.
18. Benartzi, S., Michaely, R., & Thaler, R. (1997). Do changes in dividends signal the future or the past? Journal of Finance, 52, 1007-1034.
19. Bernheim, B., & Wantz, A. (1995). A tax based test of the dividend signaling hypothesis. American Economic Review, 85, 532-551.
20. Bernstein, P. L. (1996). Dividends: the puzzle. Journal of Applied Corporate Finance, 9, 16-22.
21. Bhattacharya, S. (1979). Imperfect information, dividend policy, and 'the bird in the hand' fallacy. Bell Journal of Economics, 10, 259-270.
22. Bierman Jr., H. (2001). Increasing shareholder value: distribution policy, A corporate finance challenge. Boston: Kluwer Academic Publishers.
23. Black, F. (1976). The dividend puzzle. Journal of Portfolio Management, 2, 5-8.
24. Black, F., & Scholes, M. (1974). The effects of dividend yield and dividend policy on common stock prices and returns. Journal of Financial Economics, 1, 1-22.
25. Brennan, M. (1970). Taxes, market valuation and financial policy. National Tax Journal, 23, 417-429.
26. Brennan, M., & Thakor, A. (1990). Shareholder preferences and dividend policy. Journal of Finance, 45, 993-1019.
27. Brittain, J. (1964). The tax structure and corporate dividend policy. American Economic Review, 54, 272-287.
28. Brittain, J. (1966). Corporate dividend policy. Washington, DC: Brookings Institution.
29. Brooks, Y., Charlton, R., & Hendershott, W. (1998). Do firms use dividends to signal large future cash flows? Financial Management, 27, 151-174.
30. Cassidy, D. (2001). Do dividends still matter? AAII Journal, 23, 4-7.
31. Chan, K., Ikenberry, D. L., & Lee, I. (2000). Do managers knowingly repurchase stock on the open-market? Unpublished working paper, Rice University.
32. Chowdhry, B., & Nanda, V. (1994). Repurchase premia as a reason for dividends: a dynamic model of corporate payout policies. Review of Financial Studies, 7, 321-350.
33. Comment, R., & Jarrell, G. (1991). The relative signaling power of Dutch-auction and fixed-price self-tender offers and open-market share repurchases. Journal of Finance, 45, 1243-1271.
34. Dann, L. Y. (1981). Common stock repurchases: an analysis of returns to bondholders and stockholders. Journal of Financial Economics, 9, 113-139.
35. DeAngelo, H., DeAngelo, L., & Skinner, D. J. (1996). Reversal of fortune: dividend signaling and the disappearance of sustained earnings growth. Journal of Financial Economics, 40, 341-371.
36. DeAngelo, H., DeAngelo, L., & Skinner, D. J. (2000). Special dividends and the evolution of dividend signaling. Journal of Financial Economics, 57, 309-354.
37. Denis, D. J., Denis, D. K., & Sarin, A. (1994). The information content of dividend changes: cash flow signaling, overinvestment, and dividend clienteles. Journal of Financial and Quantitative Analysis, 29, 567-587.
38. Dyl, E., & Weigand, R. (1998). The information content of dividend initiations: additional evidence. Financial Management, 27, 27-35.
39. Easterbrook, F. (1984). Two agency cost explanations of dividends. American Economic Review, 74, 650-659.
40. Elton, E., & Gruber, M. (1970). Marginal stockholders' tax rates and the clientele effect. Review of Economics and Statistics, 52, 68-74.
41. Fama, E. F., & Babiak, H. (1968). Dividend policy: an empirical analysis. Journal of the American Statistical Association, 63, 1132-1161.
42. Fama, E. F., & French, K. R. (2001). Disappearing dividends: changing firm characteristics or lower propensity to pay? Journal of Financial Economics, 60, 3-43.
43. Farrelly, G. E., & Baker, H. K. (1989). Corporate dividends: views of institutional investors. Akron Business and Economic Review, 20, 89-100.
44. Farrelly, G. E., Baker, H. K., & Edelman, R. B. (1986). Corporate dividends: views of the policymakers. Akron Business and Economic Review, 17, 62-74.
45. Feldstein, M., & Green, J. (1983). Why do companies pay dividends? American Economic Review, 73, 7-30.
46. Fenn, G., & Liang, N. (2000). Corporate payout policy and managerial stock incentives. Journal of Financial Economics, 60, 45-72.
47. Frankfurter, G. M., & Lane, R. W. (1984). The rationality of dividends. International Review of Financial Analysis, 1, 115-130.
48. Frankfurter, G. M., & Wood, B. G. (1997). The evolution of corporate dividend policy. Journal of Financial Education, 23, 16-32.
49. Golembiewski, R.T. (1988). Nobel laureate Simon 'looks back': a low-frequency model. Public Administration Quarterly, 12, 259-274.
50. Gonedes, N. (1978). Corporate signaling, external accounting, and capital market equilibrium: evidence on dividends income and extraordinary items. Journal of Accounting Research, 16, 26-79.
51. Grullon, G. (2000). The information content of share repurchase programs. Unpublished working paper, Rice University.
52. Grullon, G., & Ikenberry, D. L. (2000). What do we know about stock repurchases? Journal of Applied Corporate Finance, 13, 31-51.
53. Grullon, G. & Michaely, R. (2000). Dividends, share repurchases, and the substitution hypothesis. Unpublished working paper, Rice University and Cornell University.
54. Harkins, E. P., & Walsh Jr., F. J. (1971). Dividend policies and practices. New York: The Conference Board.
55. Healy, P. M., & Palepu, K. G. (1988). Earnings information conveyed by dividend initiations and omissions. Journal of Financial Economics, 21, 149-175.
56. Howe, K., He, J., & Kao, G. (1992). One-time cash flow announcements and free-cash-flow theory: share repurchases and special dividends. Journal of Finance, 47, 1963-1975.
57. Ikenberry, D. L., Lakonishok, J., & Vermaelen, T. (1995). Market underreaction to open-market share repurchases. Journal of Financial Economics, 39, 181-208.
58. Jagannathan, M., Stephens, C. P., & Weisbach, M. S. (2000). Financial flexibility and the choice between dividends and stock repurchases. Journal of Financial Economics, 57, 355-384.
59. Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76, 323-329.
60. Jensen, M., Solberg, D., & Zorn, T. (1992). Simultaneous determination of insider ownership, debt, and dividend policies. Journal of Financial and Quantitative Analysis, 27, 247-264.
61. John, K., & Williams, J. (1985). Dividends, dilution, and taxes: a signaling equilibrium. Journal of Finance, 40, 1053-1070.
62. Jolls, C. (1998). Stock repurchases and incentive compensation. Working paper, National Bureau of Economic Research.
63. Kahneman, D., & Tversky, A. (1979). Prospect theory: an analysis of decision under risk. Econometrica, 47, 263-291.
64. Kahle, K. M. (2002). When a buyback isn't a buyback: open market repurchases and employee options. Journal of Financial Economics, 63, 235-261.
65. Kalay, A., & Lowenstein, U. (1986). The informational content of the timing of dividend announcements. Journal of Financial Economics, 16, 373-388.
66. Kalay, A., & Michaely, R. (1993). Dividends and taxes: a reexamination. Unpublished working paper, University of Utah.
67. Kao, C., & Wu, C. (1994). Tests of dividend signaling using the Marsh-Merton model: a generalized friction approach. Journal of Business, 67, 45-68.
68. Klein, A., & Rosenfeld, J. (1988). The impact of targeted share repurchases on the wealth of non-participating shareholders. Journal of Financial Research, 11, 135-149.
69. Kumar, P., & Lee, B. (2001). Discrete dividend policy with permanent earnings. Financial Management, 30, 55-76.
70. Lang, L., & Litzenberger, R. (1989). Dividend announcements: cash flow signaling vs. free cash flow hypothesis. Journal of Financial Economics, 24, 181-191.
71. Lease, R. C., John, K., Kalay, A., Loewenstein, U., & Sarig, O. H. (2000). Dividend policy. Boston: Harvard Business School Press.
72. Lees, F. (1983). Repurchasing common stock. New York: The Conference Board (Research Bulletin 147).
73. Lie, E. (2000). Excess funds and agency problems: an empirical study of incremental cash disbursements. Review of Financial Studies, 13, 219-248.
74. Lintner, J. (1956). Distribution of incomes of corporations among dividends, retained earnings and taxes. American Economics Review, 46, 97-113.
75. Litzenberger, R., & Ramaswamy, K. (1979). The effects of personal taxes and dividends on capital asset prices: theory and empirical evidence. Journal of Financial Economics, 7, 163-195.
76. Long, J. (1978). The market valuation of cash dividends. Journal of Financial Economics, 6, 235-264.
77. Lucas, D. J., & McDonald, R. L. (1998). Shareholder heterogeneity, adverse selection, and payout policy. Journal of Financial and Quantitative Analysis, 33, 233-253.
78. Masulis, R. W. (1980). Stock repurchases by tender offer: an analysis of the causes of common stock price changes. Journal of Finance, 35, 305-321.
79. Michaely, R. (1991). Ex-dividend day stock price behavior: the case of the 1986 tax reform act. Journal of Finance, 46, 845-860.
80. Miller, M. (1986). Behavioral rationality in finance: the case of dividends. Journal of Business, 59, S451-S468.
81. Miller, M., & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 34, 411-433.
82. Miller, M., & Rock, K. (1985). Dividend policy under asymmetric information. Journal of Finance, 40, 1031-1051.
83. Miller, M., & Scholes, M. (1978). Dividends & taxes. Journal of Financial Economics, 6, 333-364.
84. Miller, M., & Scholes, M. (1982). Dividends and taxes: some empirical evidence. Journal of Political Economy, 90, 1118-1141.
85. Miller, M. H., & Shiller, R. J. (1986). Behavioral rationality in finance: the case of dividends. Journal of Business, 59, S451-S468.
86. Netter, J. M., & Mitchell, M. L. (1989). Stock-repurchase announcements and insider transactions after the October 1987 stock market crash. Financial Management, 13, 84-96.
87. Nissim, D., & Ziv, A. (2001). Dividend changes and future profitability. Journal of Finance, 56, 2111-2133.
88. Nohel, T., & Tarhan, V. (1998). Share repurchases and firm performance: new evidence on the agency costs of free cash flow. Journal of Financial Economics, 49, 187-222.
89. Ofer, A., & Thakor, A. (1987). A theory of stock price responses to alternative corporate cash disbursement methods: stock repurchases and dividends. Journal of Finance, 42, 365-394.
90. Pruitt, S. W., & Gitman, L. J. (1991). The interactions between the investment, financing, and dividend decisions of major U.S. firms. Financial Review, 26, 409-430.
91. Rozeff, M. (1982). Growth, beta and agency costs as determinants of dividend payout ratios. Journal of Financial Research, 5, 249-259.
92. Shefrin, H. M., & Statman, M. (1984). Explaining investor preference for cash dividends. Journal of Financial Economics, 13, 253-282.
93. Thaler, R., & Shefrin, H. (1981). An economic theory of self-control. Journal of Political Economy, 89, 392-410.
94. Tsetsekos, G. P., Kaufman, D. J., & Gitman, L. J. (1991). A survey of stock repurchase motivations and practices of major U.S. corporations. Journal of Applied Business Research, 7, 15-20.
95. Vermaelen, T. (1981). Common stock repurchases and market signalling: an empirical study. Journal of Financial Economics, 9, 139-184.
96. Waller Jr., W. T. (1989). The concept of habit in economic analysis. Journal of Economic Issues, 22, 113-126.
97. Wansley, J. W., Lane, W. R., & Sarkar, S. (1989). Managements' view on share repurchase and tender offer premiums. Financial Management, 18, 97-110.
98. Watts, R. (1973). The information content of dividends. Journal of Business, 46, 191-211.
99. Weisbenner, S. (1999). Corporate share repurchases in the mid 1990s: what role do stock options play? Unpublished working paper, Federal Reserve Board.
100. Yoon, P., & Starks, L. (1995). Signaling, investment opportunities, and dividend announcements. Review of Financial Studies, 8, 995-1018.