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Disappearing Dividends: Changing Firm Characteristics Or Lower Propensity To Pay?

53 Pages Posted: 3 Feb 2000  

Eugene F. Fama

University of Chicago - Finance

Kenneth R. French

Tuck School of Business at Dartmouth; National Bureau of Economic Research (NBER)

Date Written: June 2000

Abstract

The percent of firms paying cash dividends falls from 66.5 in 1978 to 20.8 in 1999. The decline is due in part to the changing characteristics of publicly traded firms. Fed by new lists, the population of publicly traded firms tilts increasingly toward small firms with low profitability and strong growth opportunities characteristics typical of firms that have never paid dividends. More interesting, we also show that controlling for characteristics, firms become less likely to pay dividends. This lower propensity to pay is at least as important as changing characteristics in the declining incidence of dividend payers.

JEL Classification: G35

Suggested Citation

Fama, Eugene F. and French, Kenneth R., Disappearing Dividends: Changing Firm Characteristics Or Lower Propensity To Pay? (June 2000). AFA 2001 New Orleans; CRSP Working Paper No. 509. Available at SSRN: https://ssrn.com/abstract=203092 or http://dx.doi.org/10.2139/ssrn.203092

Eugene F. Fama (Contact Author)

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7282 (Phone)
773-702-9937 (Fax)

Kenneth R. French

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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