Has the Propensity to Pay Out Declined?

34 Pages Posted: 2 Sep 2007

See all articles by Gustavo Grullon

Gustavo Grullon

Rice University - Jesse H. Jones Graduate School of Business

Bradley S. Paye

Virginia Polytechnic Institute & State University - Department of Finance, Insurance, and Business Law

Shane Underwood

Baylor University

James Weston

Rice University - Jesse H. Jones Graduate School of Business

Date Written: August 31, 2007

Abstract

Several recent studies have documented a significant decline in the propensity to pay dividends over the past 30 years. However, dividends are only one component of a firm's payout policy and it is unclear whether the proportion of firms making net positive payments to shareholders has also declined. Using various measures of the net cash flowing back to shareholders, we find that the propensity to pay out has been relatively constant over the past three decades. Moreover, we find that among firms with low retained earnings there is actually an increasing propensity to distribute cash to equity holders.

Keywords: dividends, share repurchases, net payouts

JEL Classification: G35

Suggested Citation

Grullon, Gustavo and Paye, Bradley S. and Underwood, Shane and Weston, James Peter, Has the Propensity to Pay Out Declined? (August 31, 2007). Available at SSRN: https://ssrn.com/abstract=1011264 or http://dx.doi.org/10.2139/ssrn.1011264

Gustavo Grullon (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

P.O. Box 2932
Houston, TX 77252-2932
United States
(713) 348-6138 (Phone)
(713) 348-6331 (Fax)

HOME PAGE: http://www.ruf.rice.edu/~grullon/

Bradley S. Paye

Virginia Polytechnic Institute & State University - Department of Finance, Insurance, and Business Law ( email )

1016 Pamplin Hall (0221)
Blacksburg, VA 24060-0221
United States

Shane Underwood

Baylor University ( email )

P.O. Box 98004
Waco, TX 76798-8004
United States
254-710-4524 (Phone)

James Peter Weston

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005
United States
713-348-4480 (Phone)
713-348-6331 (Fax)

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