Payout policy through the financial crisis: The growth of repurchases and the resilience of dividends

Eric Floyd, Nan Li and Douglas J. Skinner

Journal of Financial Economics, 2015, vol. 118, issue 2, 299-316

Abstract: We compare the payout policies of US industrials and banks over the past 30 years to better understand dividends, especially for banks. For industrials, dividends grow strongly after 2002, when the declining propensity to pay reverses. Banks have a higher and more stable propensity to pay dividends and resist cutting dividends as the 2007–2008 financial crisis begins. Before the crisis, increases in repurchases push payouts to historic levels. These findings are broadly consistent with the idea that banks use dividends to signal financial strength while agency costs of free cash flow better explain industrial payouts.

Keywords: Dividends; Repurchases; Dividend signaling; Banks (search for similar items in EconPapers)
JEL-codes: G21 G28 G35 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (130)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:118:y:2015:i:2:p:299-316

DOI: 10.1016/j.jfineco.2015.08.002

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