Shareholder Preferences and Dividend Policy

Michael Brennan and Anjan Thakor ()

Journal of Finance, 1990, vol. 45, issue 4, 993-1018

Abstract: This paper develops a theory of choice among alternative procedures for distributing cash from corporations to shareholders. Despite the preferential tax treatment of capital gains for individual investors, it is shown that a majority of a firm's shareholders may support a dividend payment for small distributions. For larger distributions, an open-market stock repurchase is likely to be preferred by a majority of shareholders and, for the largest distributions, tender offer repurchases dominate. Copyright 1990 by American Finance Association.

Date: 1990
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