Skip to main content
Journal cover image

Payout policy in the 21st century

Publication ,  Journal Article
Brav, A; Graham, JR; Harvey, CR; Michaely, R
Published in: Journal of Financial Economics
September 1, 2005

We survey 384 financial executives and conduct in-depth interviews with an additional 23 to determine the factors that drive dividend and share repurchase decisions. Our findings indicate that maintaining the dividend level is on par with investment decisions, while repurchases are made out of the residual cash flow after investment spending. Perceived stability of future earnings still affects dividend policy as in Lintner (1956. American Economic Review 46, 97-113). However, 50 years later, we find that the link between dividends and earnings has weakened. Many managers now favor repurchases because they are viewed as being more flexible than dividends and can be used in an attempt to time the equity market or to increase earnings per share. Executives believe that institutions are indifferent between dividends and repurchases and that payout policies have little impact on their investor clientele. In general, management views provide little support for agency, signaling, and clientele hypotheses of payout policy. Tax considerations play a secondary role. © 2005 Elsevier B.V. All rights reserved.

Duke Scholars

Altmetric Attention Stats
Dimensions Citation Stats

Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

September 1, 2005

Volume

77

Issue

3

Start / End Page

483 / 527

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics
 

Citation

APA
Chicago
ICMJE
MLA
NLM
Brav, A., Graham, J. R., Harvey, C. R., & Michaely, R. (2005). Payout policy in the 21st century. Journal of Financial Economics, 77(3), 483–527. https://doi.org/10.1016/j.jfineco.2004.07.004
Brav, A., J. R. Graham, C. R. Harvey, and R. Michaely. “Payout policy in the 21st century.” Journal of Financial Economics 77, no. 3 (September 1, 2005): 483–527. https://doi.org/10.1016/j.jfineco.2004.07.004.
Brav A, Graham JR, Harvey CR, Michaely R. Payout policy in the 21st century. Journal of Financial Economics. 2005 Sep 1;77(3):483–527.
Brav, A., et al. “Payout policy in the 21st century.” Journal of Financial Economics, vol. 77, no. 3, Sept. 2005, pp. 483–527. Scopus, doi:10.1016/j.jfineco.2004.07.004.
Brav A, Graham JR, Harvey CR, Michaely R. Payout policy in the 21st century. Journal of Financial Economics. 2005 Sep 1;77(3):483–527.
Journal cover image

Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

September 1, 2005

Volume

77

Issue

3

Start / End Page

483 / 527

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics