Why Are Corporate Payouts So High in the 2000s?

Why Are Corporate Payouts So High in the 2000s?

Kathleen Kahle, René Stulz

Series number :

Serial Number: 
669/2020

Date posted :

April 09 2020

Last revised :

September 10 2020
SSRN Share

Keywords

  • payouts • 
  • Repurchases • 
  • dividends • 
  • payout rate • 
  • firm characteristics • 
  • taxes

The annual inflation-adjusted amount paid out through dividends and repurchases by public industrial firms is three times larger from 2000 to 2018 than from 1971 to 1999. We find that 38% of the increase in aggregate annual payouts is explained by an increase in aggregate corporate income and 62% by an increase in the aggregate payout rate.

At the firm level, changes in firm characteristics explain 71% (49%) of the increase in the average payout rate for the population (firms with payouts). Consistent with management having stronger payout incentives, payouts are more responsive to firm characteristics in the 2000s than before.

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Authors

Professor
Real name:
Kathleen Kahle
University of Arizona