Why Are Corporate Payouts So High in the 2000s?

Kahle, Kathleen M.; Stulz, René M.

doi:10.2139/ssrn.3678973

Why Are Corporate Payouts So High in the 2000s?

Fisher College of Business Working Paper No. 2020-03-020

Charles A. Dice Working Paper No. 2020-20

European Corporate Governance Institute – Finance Working Paper 669/2020

70 Pages Posted: 24 Aug 2020 Last revised: 11 Sep 2020

See all articles by Kathleen M. Kahle

Kathleen M. Kahle

University of Arizona - Department of Finance

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: August 21, 2020

Abstract

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

Kahle, Kathleen M. and Stulz, Rene M., Why Are Corporate Payouts So High in the 2000s? (August 21, 2020). Fisher College of Business Working Paper No. 2020-03-020, Charles A. Dice Working Paper No. 2020-20, European Corporate Governance Institute – Finance Working Paper 669/2020, Available at SSRN: https://ssrn.com/abstract=3678973 or http://dx.doi.org/10.2139/ssrn.3678973