Declining propensity to pay? A re-examination of the lifecycle theory

Monica L. Banyi and Kathleen M. Kahle

Journal of Corporate Finance, 2014, vol. 27, issue C, 345-366

Abstract: Our results indicate that the declining propensity to pay is a function of the changing composition of firms over time and not a declining propensity in individual firms themselves. In particular, the propensity to pay is greater than expected following the 2003 dividend tax cut. The decade a firm went public is also a major determinant of its initial payout policy. Finally, while the strength of the relation between earned/contributed capital and payout propensity declines across IPO decades, there is still a lifecycle effect — within a given IPO cohort, the likelihood of payout increases as firms age.

Keywords: Dividends; Repurchases; Payout policy; Earned equity; Lifecycle theory (search for similar items in EconPapers)
JEL-codes: G35 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:27:y:2014:i:c:p:345-366

DOI: 10.1016/j.jcorpfin.2014.06.001

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