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http://ssrn.com/abstract=2258895
 
 

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Declining Propensity to Pay? A Re-Examination of the Life Cycle Theory


Monica Banyi


University of Virginia (UVA) - McIntire School of Commerce

Kathleen M. Kahle


University of Arizona - Department of Finance

February 22, 2014


Abstract:     
Our results indicate that the declining propensity to pay is a function of the changing composition of firms over time and not a declining propensity in individual firms themselves. In particular, the propensity to pay is greater than expected following the 2003 dividend tax cut. The decade a firm went public is also a major determinant of its initial payout policy. Finally, while the strength of the relation between earned/contributed capital and payout propensity declines across IPO decades, there is still a lifecycle effect - within a given IPO cohort, the likelihood of payout increases as firms age.

Number of Pages in PDF File: 45

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Date posted: May 2, 2013 ; Last revised: February 27, 2014

Suggested Citation

Banyi, Monica and Kahle, Kathleen M., Declining Propensity to Pay? A Re-Examination of the Life Cycle Theory (February 22, 2014). Available at SSRN: http://ssrn.com/abstract=2258895 or http://dx.doi.org/10.2139/ssrn.2258895

Contact Information

Monica L. Banyi
University of Virginia (UVA) - McIntire School of Commerce ( email )
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
Kathleen M. Kahle (Contact Author)
University of Arizona - Department of Finance ( email )
McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-7489 (Phone)
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