Why Are Corporate Payouts So High in the 2000s?

Kahle, Kathleen M.; Stulz, René

Download This Paper

Open PDF in Browser

Add Paper to My Library

Why Are Corporate Payouts So High in the 2000s?

NBER Working Paper No. w26958

52 Pages Posted: 13 Apr 2020 Last revised: 28 Feb 2026

See all articles by Kathleen M. Kahle

Kathleen M. Kahle

University of Arizona - Department of Finance; European Corporate Governance Institute (ECGI)

René Stulz

Ohio State University (OSU) - Fisher College of Business

Date Written: April 2020

Abstract

The average annual inflation-adjusted amount paid out through dividends and repurchases by public industrial firms is more than three times larger from 2000 to 2019 than from 1971 to 1999. We find that an increase in aggregate corporate income accounts for 37% of the increase in aggregate annual payouts and an increase in the payout rate accounts for 63%. Firms have higher payout rates in the 2000s not only because they are older, larger, and have more free cash flow, but also because they pay out more of their free cash flow. Though firms spend less on capital expenditures in the 2000s than before, capital expenditures decrease similarly for the firms with payouts and for firms without.

Suggested Citation: Suggested Citation

Kahle, Kathleen M. and Stulz, René, Why Are Corporate Payouts So High in the 2000s? (April 2020). NBER Working Paper No. w26958, Available at SSRN: https://ssrn.com/abstract=3574423