Payout Policy
Franklin Allen and
Roni Michaely
Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania
Abstract:
This paper surveys the literature on payout policy. We start with a description of the Miller-Modigliani payout irrelevance proposition, and then consider the effect of relaxing the assumptions on which it is based. We consider the role of taxes, asymmetric information, incomplete contracting possibilities, and transaction costs. The accumulated evidence indicates that changes in payout policies are not motivated by firms' desire to signal their true worth to the market. Both dividends and repurchases seem to be paid to reduce potential overinvestment by management. We also review the issue of the form of payout and the increased tendency to use open market share repurchases. Evidence suggests that the rise in the popularity of repurchases increased overall payout and increased firms' financial flexibility.
Date: 2002-04
References: Add references at CitEc
Citations: View citations in EconPapers (57)
Downloads: (external link)
http://fic.wharton.upenn.edu/fic/papers/01/0121.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://fic.wharton.upenn.edu/fic/papers/01/0121.pdf [301 Moved Permanently]--> https://wifpr.wharton.upenn.edu/fic/papers/01/0121.pdf)
Related works:
Journal Article: Payout Policy (2014) 
Chapter: Payout policy (2003) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wop:pennin:01-21
Access Statistics for this paper
More papers in Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().