Why Are Corporate Payouts So High in the 2000s?
Charles A. Dice Working Paper No. 2020-20
70 Pages Posted: 24 Aug 2020 Last revised: 11 Sep 2020
Date Written: August 21, 2020
The annual inflation-adjusted amount paid out through dividends and repurchases by public industrial firms is three times larger from 2000 to 2018 than from 1971 to 1999. We find that 38% of the increase in aggregate annual payouts is explained by an increase in aggregate corporate income and 62% by an increase in the aggregate payout rate. At the firm level, changes in firm characteristics explain 71% (49%) of the increase in the average payout rate for the population (firms with payouts). Consistent with management having stronger payout incentives, payouts are more responsive to firm characteristics in the 2000s than before.
Keywords: payouts, repurchases, dividends, payout rate, firm characteristics, taxes
JEL Classification: G35
Suggested Citation: Suggested Citation