Chapter 7 Payout policy

Handbook of the Economics of Finance

Volumn 1, Issue SUPPL. PART A, 2003, Pages 337-429

  Allen, Franklin ^a   Michaely, Roni ^b  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b Department of Obstetrics Gynecology   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 66049131570     PISSN: 15740102     EISSN: None     Source Type: Book Series    
DOI: 10.1016/S1574-0102(03)01011-2     Document Type: Chapter

References (163)

1. Ackert L., and Smith B. Stock price volatility, ordinary dividends, and other cash flows to shareholders. Journal of Finance 48 4 (1993) 1147-1160
2. Aharony J., and Swary I. Quarterly dividend and earnings announcements and stockholders' returns: an empirical analysis. Journal of Finance 35 1 (1980) 1-12
3. Allen F., and Michaely R. Dividend policy. In: Jarrow R., Maksimovic V., and Ziemba W.T. (Eds). Handbook in Operations Research and Management Science Vol. 9 (1995), Elsevier, Amsterdam
4. Allen F., Bernardo A., and Welch I. A theory of dividends based on tax clientele. Journal of Finance 55 6 (2000) 2499-2536
5. Ambarish R., John K., and Williams J. Efficient signaling with dividends and investments. Journal of Finance 42 2 (1987) 321-343
6. Amihud Y., and Mendelson H. Asset pricing and bid-ask spread. Journal of Financial Economics 17 (1986) 223-250
7. Amihud Y., and Murgia M. Dividends, taxes, and signaling: evidence from Germany. Journal of Finance 52 1 (1997) 397-408
8. Asquith P., and Mullins Jr. D.W. The impact of initiating dividend payments on shareholders' wealth. Journal of Business 56 1 (1983) 77-96
9. Auerbach A.J. Wealth maximization and the cost of capital. Quarterly Journal of Economics v93 3 (1979) 433-446
10. Bagwell L. Dutch auction repurchases: an analysis of shareholder heterogeneity. Journal of Finance 47 1 (1992) 71-105
11. Bagwell L.S. Shareholder heterogeneity: evidence and implications. American Economic Review 81 2 (1991) 218-221
12. Bagwell L.S., and Shoven J. Cash distributions to shareholders. Journal of Economic Perspectives 3 3 (1989) 129-140
13. Baker M., and Wurgler J. The equity share in new issues and aggregate stock returns. The Journal of Finance 55 (2000) 2219-2257
14. Bali R., and Hite G. Ex-dividend day stock price behavior: discreteness or tax-induced clientele?. Journal of Financial Economics 47 (1998) 127-159
15. Barclay M. Dividends, taxes, and common stock prices: the ex-dividend day behavior of common stock prices before the income tax. Journal of Financial Economics 14 (1987) 31-44
16. Barclay M.J., and Smith Jr. C.W. Corporate payout policy: cash dividends versus open-market repurchases. Journal of Financial Economics 22 1 (1988) 61-82
17. Bartov E. Open-market stock repurchase as signals for earnings and risk changes. Journal of Accounting and Economics 14 (1991) 275-294
18. Benartzi S., Michaely R., and Thaler R. Do changes in dividends signal the future or the past?. Journal of Finance 52 3 (1997) 1007-1043
19. Bernhardt D., Robertson J.F., and Farrow R. Testing dividend signaling models. Working Paper (1994), Queen's University, Ontario, Canada
20. Bernheim D. Tax policy and the dividend puzzle. Rand Journal of Economics 22 (1991) 455-476
21. Bernheim D., and Wantz A. A tax-based test of the dividend signaling hypothesis. American Economic Review 85 3 (1995) 532-551
22. Bhattacharya S. Imperfect information, dividend policy, and 'the bird in the hand' fallacy. Bell Journal of Economics 10 1 (1979) 259-270
23. Binay M. Do dividend clienteles exist? Institutional investor reaction to dividend events. Working Paper (2001), University of Texas, Austin
24. Black F. The dividend puzzle. Journal of Portfolio Management 2 (1976) 5-8
25. Black F., and Scholes M. The effects of dividend yield and dividend policy on common stock prices and returns. Journal of Financial Economics 1 (1974) 1-22
26. Blume M.E. Stock return and dividend yield: some more evidence. Review of Economics and Statistics 62 (1980) 567-577
27. Blume M.E., Crockett J., and Friend I. Stock ownership in the United States: characteristics and trends. Survey of Current Business (1974) 16-40
28. Boyd J., and Jagannathan R. Ex-dividend price behavior of common stocks: fitting some pieces of the puzzle. Review of Financial Studies 7 4 (1994) 711-741
29. Bradford D.F. The incidence and allocation effects of a tax on corporate distributions. Journal of Public Economics 15 (1981) 1-22
30. Brav A., and Heaton J.B. Did ERISA's prudent man rule change the pricing of dividend omitting firms?. Working Paper (1998), Duke University, NC
31. Brennan M.J. Taxes, market valuation and financial policy. National Tax Journal 23 (1970) 417-429
32. Brennan M.J., and Thakor A.V. Shareholder preferences and dividend policy. Journal of Finance 45 4 (1990) 993-1019
33. Brickley J. Shareholders wealth, information signaling, and the specially designated dividend: an empirical study. Journal of Financial Economics 12 (1983) 187-209
34. Charest G. Dividend information, stock returns and market efficiency - II. Journal of Financial Economics 6 (1978) 297-330
35. Chen N.F., Grundy B., and Stambaugh R.F. Changing risk, changing risk premiums, and dividend yield effects. Journal of Business 63 (1990) S51-S70
36. Chowdhry B., and Nanda V. Repurchase premia as a reason for dividends: a dynamic model of corporate payout policies. Review of Financial Studies 7 (1994) 321-350
37. Christie W., and Nanda V. Free cash flow, shareholder value, and the undistributed profits tax of 1936 and 1937. Journal of Finance 49 5 (1994) 1727-1754
38. Comment R., and Jarrell G. The relative power of Dutch-Auction and fixed-priced self-tender offers and open market share repurchases. Journal of Finance 46 4 (1991) 1243-1271
39. Constantinides G.M. Optimal stock trading with personal taxes. Journal of Financial Economics 13 (1984) 65-89
40. Constantinides G.M., and Grundy B.D. Optimal investment with stock repurchase and financing as signals. Review of Financial Studies 2 4 (1989) 445-466
41. Dann L., Masulis R., and Mayers D. Repurchase tender offers and earning information. Journal of Accounting and Economics 14 (1991) 217-251
42. DeAngelo H., and DeAngelo L. Dividend policy and financial distress: an empirical investigation of troubled NYSE firms. Journal of Finance 45 5 (1990) 1415-1431
43. DeAngelo H., DeAngelo L., and Skinner D. Reversal of fortune, dividend signaling and the disappearance of sustained earnings growth. Journal of Financial Economics 40 (1996) 341-371
44. Del Guercio D. The distorting effect of the prudent-man laws on institutional equity investments. Journal of Financial Economics 40 (1996) 31-62
45. Dubofsky D.A. A market microstructure explanation of ex-day abnormal returns. Financial Management (1992) 32-43 (Winter)
46. Dunbar N. UK firms consider option scheme. Risk Magazine (2001) 14 (March)
47. Dunsby A. Share repurchases and corporate distributions: an empirical study. Working Paper (1993), University of Pennsylvania
48. Eades K., Hess P., and Kim H.E. On interpreting security returns during the ex-dividend period. Journal of Financial Economics 13 (1984) 3-34
49. Easley D., Hvidkjaer S., and O'Hara M. Is information risk a determinant of asset returns?. Journal of Finance 57 (2002) 2185-2221
50. Easterbrook F.H. Two agency-cost explanations of dividends. American Economic Review 74 4 (1984) 650-659
51. Elton E., and Gruber M. Marginal stockholders' tax rates and the clientele effect. Review of Economics and Statistics 52 (1970) 68-74
52. Fama E., and French K. Forecasting profitability and earnings. Journal of Business 73 (2000) 161-175
53. Fama E., and French K. Disappearing dividends: changing firm characteristics or lower propensity to pay?. Journal of Financial Economics 60 (2001) 3-43
54. Fama E.F., and Babiak H. Dividend policy: an empirical analysis. Journal of the American Statistical Association 63 324 (1968) 1132-1161
55. Fama E.F., and French K.R. Common risk factors in the returns on stocks and bonds. Journal of Financial Economics 33 (1993) 3-56
56. Fama E.F., and Macbeth J.D. Risk, return and equilibrium: empirical tests. Journal of Political Economy 81 (1973) 607-636
57. Federal Reserve Statistical Release. Flow of Funds Accounts of the United States, Federal Reserve Statistical Release (2000), Board of Governors of the Federal Reserve System, Washington DC
58. Fenn G., and Liang N. Corporate payout policy and managerial stock incentives. Journal of Financial Economics 60 (2001) 45-72
59. Fluck Z. The dynamics of the manager-shareholder conflict. Review of Financial Studies 12 2 (1999) 379-404
60. Frank M., and Jagannathan R. Why do stock prices drop by less than the value of the dividend? Evidence from a country without taxes. Journal of Financial Economics 47 (1998) 161-188
61. Gonedes N.J. Corporate signaling, external accounting, and capital market equilibrium: evidence on dividends, income, and extraordinary items. Journal of Accounting Research 16 1 (1978) 26-79
62. Gordon M. Dividends, earnings and stock prices. Review of Economics and Statistics 41 (1959) 99-105
63. Green R., and Rydqvist K. Ex-day behavior with dividend preference and limitation to short-term arbitrage: the case of Swedish lottery bonds. Journal of Financial Economics 53 (1999) 145-187
64. Grossman S.J., and Hart O.D. Takeover bids, the free-rider problem, and the theory of the corporation. Bell Journal of Economics 11 (1980) 42-54
65. Grullon G., and Ikenberry D. What do know about stock repurchase?. Journal of Applied Corporate Finance 13 (2000) 31-51
66. Grullon G., and Michaely R. Asymmetric information, agency conflicts and the impact of taxation on the market reaction to dividend changes. Working Paper (2001), Cornell University, Ithaca, NY
67. Grullon G., and Michaely R. Dividends, share repurchases and the substitution hypothesis. The Journal of Finance 62 4 (2002) 1649-1684
68. Grullon G., and Michaely R. The information content of share repurchase programs. The Journal of Finance (2003) forthcoming
69. Grullon G., Michaely R., and Swaminathan B. Are dividend changes a sign of firm maturity?. The Journal of Business 75 (2002) 387-424
70. Grullon G., Michaely R., Benartzi S., and Thaler R. Dividend changes do not signal changes in future profitability. Working Paper (2003), Cornell University, NY
71. Grundy B. Trading volume and stock returns around ex-dividend dates. Working Paper (1985), University of Chicago, Chicago, IL
72. Handjinicolaou G., and Kalay A. Wealth redistributions or changes in firm value: an analysis of returns to bondholders and the stockholders around dividend announcements. Journal of Financial Economics 13 1 (1984) 35-63
73. Hasbrouck J., and Friend I. Why do companies pay dividends?: Comment. American Economic Review 74 (1984) 1137-1141
74. Healy P.M., and Palepu K.G. Earnings information conveyed by dividend initiations and omissions. Journal of Financial Economics 21 2 (1988) 149-176
75. Hertzel M., and Jain P. Earnings and risk changes around stock repurchase tender offers. Journal of Accounting and Economics 14 (1991) 252-274
76. Hess P.J. Test of price effects in the pricing of financial assets. Journal of Business 56 (1983) 537-554
77. Hubbard J., and Michaely R. Do investors ignore dividend taxation? A re-examination of the Citizen Utilities case. Journal of Financial and Quantitative Analysis 32 1 (1997) 117-135
78. Ikenberry D., Lakonishok J., and Vermaelen T. Market underreaction to open market share repurchases. Journal of Financial Economics 39 (1995) 181-208
79. Ikenberry D., Lakonishok J., and Vermaelen T. Share repurchases in Canada: performance and strategic trading. Journal of Finance 55 (2000) 2373-2397
80. Internal Revenue Service (various years), SOI Bulletin (Department of Treasury)
81. Jagannathan M., and Stephens C.P. Motives for open market share repurchases: under-valuation, earnings signaling or free cash flow. Working Paper (2001), University of Missouri, Columbia
82. Jagannathan M., Stephens C.P., and Weisbach M.S. Financial flexibility and the choice between dividends and stock repurchases. Journal of Financial Economics 57 (2000) 355-384
83. Jensen M.C. Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review 76 2 (1986) 323-329
84. Jensen M.C., and Meckling W.H. Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3 4 (1976) 305-360
85. John K., and Williams J. Dividends, dilution, and taxes: a signaling equilibrium. Journal of Finance 40 4 (1985) 1053-1070
86. Jolls C. The role of incentive compensation in explaining the stock repurchase puzzle. Working Paper (1998), Harvard Law School
87. Kalay A. The ex-dividend day behavior of stock prices: a re-examination of the clientele effect. Journal of Finance 37 (1982) 1059-1070
88. Kalay A. Stockholder-bondholder conflict and dividend constraint. Journal of Financial Economics 14 (1982) 423-449
89. Kalay A., and Michaely R. Dividends and taxes: a reexamination. Financial Management 29 2 (2000) 55-75
90. Kang S.H., and Kumar P. Determinants of dividend smoothing: Evidence from dividend changes. Working Paper (1991), Carnegie Mellon University, PA
91. Karpoff J.M., and Walkling R.A. Short-term trading around ex-dividend days: additional evidence. Journal of Financial Economics 21 2 (1988) 291-298
92. Karpoff J.M., and Walkling R.A. Dividend capture in NASDAQ stocks. Journal of Financial Economics 28 1/2 (1990) 39-66
93. Kato K., and Loewenstein U. The ex-dividend-day behavior of stock prices: the case of Japan. Review of Financial Studies 8 (1995) 817-847
94. Keim D. Dividend yields and stock returns: implications of abnormal January returns. Journal of Financial Economics 14 (1985) 473-489
95. King M. Public Policy and the Corporation (1977), Chapman and Hall, London
96. Koski J., and Michaely R. Prices, liquidity and the information content of trades. Review of Financial Studies 13 3 (2000) 659-696
97. Kumar P. Shareholder-manager conflict and the information content of dividends. Review of Financial Studies 1 2 (1988) 111-136
98. La Porta R., Lopez-De Silanes F., Shleifer A., and Vishny R. Agency problems and dividend policy around the world. Journal of Finance 55 (2000) 1-33
99. Lakonishok J., and Vermaelen T. Tax reform and the ex-dividend day behavior. Journal of Finance 38 (1983) 1157-1179
100. Lakonishok J., and Vermaelen T. Tax induced trading around ex-dividend dates. Journal of Financial Economics 16 (1986) 287-319
101. Lang L.H.P., and Litzenberger R.H. Dividend announcements: cash flow signaling vs. free cash flow hypothesis. Journal of Financial Economics 24 1 (1989) 181-192
102. Lewellen W.G., Stanley K.L., Lease R.C., and Schlarbaum G.G. Some direct evidence on the dividend clientele phenomenon. Journal of Finance 33 5 (1978) 1385-1399
103. Lie E. Excess funds and the agency problems: an empirical study of incremental disbursements. Review of Financial Studies 13 1 (2000) 219-248
104. Lie E. Financial flexibility and the corporate payout policy. Working Paper (2001), College of William and Mary, VA
105. Lintner J. Distribution of incomes of corporations among dividends, retained earnings, and taxes. American Economic Review 46 2 (1956) 97-113
106. Litzenberger R., and Ramaswamy K. The effects of personal taxes and dividends on capital asset prices: theory and empirical evidence. Journal of Financial Economics 7 (1979) 163-195
107. Litzenberger R., and Ramaswamy K. Dividends, short selling restrictions, tax induced investor clientele and market equilibrium. Journal of Finance 35 (1980) 469-482
108. Litzenberger R., and Ramaswamy K. The effects of dividends on common stock prices: tax effects or information effects?. Journal of Finance 37 (1982) 429-443
109. Long J.B. Efficient portfolio choice with differential taxation of dividend and capital gains. Journal of Financial Economics 5 (1977) 25-53
110. Long Jr. J.B. The market valuation of cash dividends: a case to consider. Journal of Financial Economics 6 2/3 (1978) 235-264
111. Loughran T., and Ritter J. The new issues puzzle. Journal of Finance 50 1 (1995) 23-51
112. Lucas D.J., and McDonald R.L. Shareholder heterogeneity, adverse selection, and payout policy. Journal of Financial and Quantitative Analysis 33 2 (1998) 233-253
113. Masulis R.W., and Korwar A.N. Seasoned equity offerings: an empirical investigation. Journal of Financial Economics 15 1/2 (1986) 91-118
114. Michaely R. Ex-dividend day stock price behavior: the case of the 1986 Tax Reform Act. Journal of Finance 46 (1991) 845-860
115. Michaely R., and Murgia M. The effect of tax heterogeneity on prices and volume around the ex-dividend day: evidence from the Milan stock exchange. Review of Financial Studies 8 (1995) 369-399
116. Michaely R., and Shaw W.H. The pricing of initial public offerings: tests of the adverse selection and signaling theories. Review of Financial Studies 7 2 (1994) 279-319
117. Michaely R., and Vila J.-L. Investors' heterogeneity, prices and volume around the ex-dividend day. Journal of Financial and Quantitative Analysis 30 (1995) 171-198
118. Michaely R., and Vila J.-L. Trading volume with private valuations: evidence from the ex-dividend day. Review of Financial Studies 9 2 (1996) 471-510
119. Michaely R., Thaler R.H., and Womack K. Price reactions to dividend initiations and omissions: overreaction or drift?. Journal of Finance 50 2 (1995) 573-608
120. Michaely R., Vila J.-L., and Wang J. A model of trading volume with tax-induced heterogeneous valuation and transaction costs. Journal of Financial Intermediation 5 (1996) 471-510
121. Miller J., and McConnell J. Open-market share repurchase programs and bid-ask spreads on the NYSE: implications for corporate payout policy. Journal of Financial and Quantitative Analysis 30 3 (1995) 365-382
122. Miller M. Debt and taxes. The Journal of Finance 32 2 (1977) 261-275
123. Miller M. The information content of dividends. In: Bossons J., Dornbush R., and Fischer S. (Eds). Macroeconomics: Essays in Honor of Franco Modigliani (1987), MIT Press, Cambridge, MA 37-61
124. Miller M., and Modigliani F. Dividend policy, growth and the valuation of shares. Journal of Business 34 (1961) 411-433
125. Miller M., and Rock K. Dividend policy under asymmetric information. Journal of Finance 40 4 (1985) 1031-1051
126. Miller M., and Scholes M. Dividends and taxes. Journal of Financial Economics 6 (1978) 264-333
127. Miller M., and Scholes M. Dividends and taxes: empirical evidence. Journal of Political Economy 90 (1982) 1118-1141
128. Moody's dividend record (various years) (Mergert FIS, Inc., New York)
129. Morgan I.G. Dividends and capital asset prices. Journal of Finance 37 (1982) 1071-1086
130. Myers S.C. Determinants of corporate borrowing. Journal of Financial Economics 5 2 (1977) 147-175
131. Myers S.C. Outside equity. Journal of Finance 55 3 (2000) 1005-1038
132. Myers S.C., and Majluf N.S. Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics 13 2 (1984) 187-221
133. Naranjo A., Nimalendran M., and Ryngaert M. Stock returns, dividend yield and taxes. Journal of Finance 53 6 (1998) 2029-2057
134. Nissim D., and Ziv A. Dividend changes and future profitability. Journal of Finance 61 6 (2001) 2111-2134
135. Nohel T., and Tarhan V. Share repurchases and firm performance: new evidence on the agency costs of free cash flow. Journal of Financial Economics 49 (1998) 187-222
136. Ofer A.R., and Siegel D.R. Corporate financial policy, information, and market expectations: an empirical investigation of dividends. Journal of Finance 42 4 (1987) 889-911
137. Ofer A.R., and Thakor A.V. A theory of stock price responses to alternative corporate cash disbursement methods: stock repurchases and dividends. Journal of Finance 42 2 (1987) 365-394
138. Penman S.H. The predictive content of earnings forecasts and dividends. Journal of Finance 38 4 (1983) 1181-1199
139. Perez-Gonzalez F. Large shareholders and dividends: evidence from U.S. tax reforms. Working Paper (2000), Harvard University
140. Peterson P., Peterson D., and Ang J. Direct evidence on the marginal rate of taxation on dividend income. Journal of Financial Economics 14 (1985) 267-282
141. Pettit R.R. Dividend announcements, security performance, and capital market efficiency. Journal of Finance 27 5 (1972) 993-1007
142. Poterba J. The market valuation of cash dividends: the citizens utilities case reconsidered. Journal of Financial Economics 15 (1986) 395-406
143. Poterba J., and Summers L.H. New evidence that taxes affect the valuation of dividends. Journal of Finance 39 (1984) 1397-1415
144. Poterba J., Venti S., and Wise D. How retirement saving programs increase saving. Reconciling the evidence. Journal of Economic Perspectives 10 4 (1996) 91-112
145. Richardson G., Sefcik S., and Thompson R. A test of dividend irrelevance using volume reactions to a change in dividend policy. Journal of Financial Economics 17 (1986) 313-333
146. Ritter J.R. The long run performance of initial public offerings. Journal of Finance 46 1 (1991) 3-28
147. Rosenberg B., and Marathe V. Tests of capital asset pricing hypotheses. Research in Finance 1 (1979) 115-224
148. Ross S.A. The determination of financial structure: the incentive signalling approach. Bell Journal of Economics (1977) 13-40
149. Sarig O. Why do companies pay dividends?: Comment. American Economic Review 74 (1984) 1142
150. Shefrin H.M., and Statman M. Explaining investor preference for cash dividends. Journal of Financial Economics 13 2 (1984) 253-282
151. Shleifer A., and Vishny R. Large shareholders and corporate control. Journal of Political Economy 94 3 (1986) 461-488
152. Standard and Poor's Dividend Record (various years) (Standard and Poor's Corporation, New York)
153. Stephens C., and Weisbach M. Actual share reacquisitions in open market repurchases programs. Journal of Finance 53 1 (1998) 313-333
154. Stiglitz J.E. Some aspects of the taxation of capital gains. Journal of Public Economics 21 (1983) 257-296
155. Stulz R. Managerial control of voting rights: financing policies and the market for corporate control. Journal of Financial Economics 20 1-2 (1988) 25-54
156. Thaler R.H., and Shefrin H.M. An economic theory of self-control. Journal of Political Economy 89 2 (1981) 392-406
157. Vermaelen T. Common stock repurchases and market signaling: an empirical study. Journal of Financial Economics 9 2 (1981) 138-183
158. Vermaelen T. Repurchase tender offers, signalling and managerial incentives. Journal of Financial and Quantitative Analysis 19 (1984) 163-181
159. Watts R. The information content of dividends. Journal of Business 46 2 (1973) 191-211
160. Weisbenner S. Corporate share repurchase in the mid-1990s: What role do stock options play. Working Paper (2000), MIT, MA
161. Williams J. Efficient signaling with dividends, investment, and stock repurchases. Journal of Finance 43 3 (1988) 737-747
162. Yoon P.S., and Starks L. Signaling, investment opportunities, and dividend announcements. Review of Financial Studies 8 4 (1995) 995-1018
163. Zwiebel J. Dynamic capital structure under managerial entrenchment. American Economic Review 86 5 (1996) 1197-1215