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http://ssrn.com/abstract=1979501
 
 

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Payout Policy Through the Financial Crisis: The Growth of Repurchases and the Resilience of Dividends


Eric Floyd


University of Chicago - Booth School of Business

Nan Li


University of Toronto - Rotman School of Management

Douglas J. Skinner


The University of Chicago - Booth School of Business

March 1, 2015

Chicago Booth Research Paper No. 12-01

Abstract:     
We compare the payout policies of US industrials and banks over the past 30 years to better understand dividends, especially for banks. For industrials, the declining propensity to pay reverses after 2002, after which dividends grow strongly. Banks have a higher and more stable propensity to pay dividends and resist cutting dividends as the crisis begins. Before the crisis, increases in repurchases push total payouts to historic levels. These findings are broadly consistent with the idea that banks use dividends to signal financial strength while agency costs of free cash flow better explain industrial payouts.

Number of Pages in PDF File: 41

Keywords: Dividends, Repurchases, Dividend signaling, Banks

JEL Classification: G21, G28, G35


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Date posted: January 5, 2012 ; Last revised: April 18, 2015

Suggested Citation

Floyd, Eric and Li, Nan and Skinner, Douglas J., Payout Policy Through the Financial Crisis: The Growth of Repurchases and the Resilience of Dividends (March 1, 2015). Chicago Booth Research Paper No. 12-01. Available at SSRN: http://ssrn.com/abstract=1979501 or http://dx.doi.org/10.2139/ssrn.1979501

Contact Information

Eric Floyd
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Nan Li
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-3126 (Phone)
Douglas J. Skinner (Contact Author)
The University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

Chicago Booth School of Business Logo

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