Revisiting managerial perspectives on dividend policy

H. Baker (), Gary Powell () and E. Veit ()

Journal of Economics and Finance, 2002, vol. 26, issue 3, 267-283

Abstract: We survey managers of Nasdaq firms that consistently pay cash dividends to determine their views about dividend policy, the relationship between dividend policy and value, and four common explanations for paying dividends. The evidence shows that managers stress the importance of maintaining dividend continuity and widely agree that changes in dividends affect firm value. Managers give the strongest support to a signaling explanation for paying dividends, weak to little support for the tax-preference and agency cost explanations, and no support to the bird-in-the-hand explanation. The study provides new evidence about how managers view dividend life cycles and residual dividend policy. Copyright Springer 2002

Date: 2002
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DOI: 10.1007/BF02759711

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