Are Dividends Disappearing? Dividend Concentration and the Consolidation of Earnings

40 Pages Posted: 15 Aug 2002  

Harry DeAngelo

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Linda DeAngelo

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Douglas J. Skinner

The University of Chicago - Booth School of Business

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Date Written: July 2002

Abstract

Although the number of dividend paying industrials declines by more than 50% over the last two decades (Fama and French (2001a)), aggregate real dividends paid by industrials increase over the same period. Dividends increase despite a precipitous decline in the number of payers because (i) the reduction in payers occurs almost entirely among firms that pay very small dividends, and (ii) increased real dividends from the top payers swamp the modest dividend reduction associated with the loss of many small payers. These secular changes reflect high and increasing concentration in the supply of dividends which, in turn, reflect high and increasing earnings concentration. For example, 26 firms with real earnings of $1 billion-plus account for 63.4% and 46.8% of aggregate industrial earnings and dividends in 2000. Our findings on dividend concentration cast doubt on the empirical validity of the dividend clientele and signaling hypotheses.

Keywords: Dividends, earnings, concentration

JEL Classification: G35, G34, M41

Suggested Citation

DeAngelo, Harry and DeAngelo, Linda and Skinner, Douglas J., Are Dividends Disappearing? Dividend Concentration and the Consolidation of Earnings (July 2002). USC CLEO Research Paper No. C02-17; USC FBE Working Paper No. 02-9. Available at SSRN: https://ssrn.com/abstract=318562 or http://dx.doi.org/10.2139/ssrn.318562

Harry DeAngelo (Contact Author)

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States
213-740-6541 (Phone)
213-740-6650 (Fax)

Linda DeAngelo

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States
213-740-3868 (Phone)
213-740-6650 (Fax)

Douglas J. Skinner

The University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

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