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Patterns in payout policy and payout channel choice

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  • Renneboog, Luc
  • Trojanowski, Grzegorz
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    Abstract

    We study the decision to distribute funds as well as the choice of the payout channel (i.e. dividends, repurchases, or both). Our analysis of the payout policy of UK firms demonstrates that the importance of share repurchases is increasing, but dividends still constitute a vast proportion of the total payout. We document that there is a relation between the presence of blockholders and the choice of the payout channel. We find that payout decisions are influenced by directors' liquidity needs but are not consistent with the agency theory of payout. We also reject the tax-clientele explanation for payout choices.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 35 (2011)
    Issue (Month): 6 (June)
    Pages: 1477-1490

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    Handle: RePEc:eee:jbfina:v:35:y:2011:i:6:p:1477-1490

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    Web page: http://www.elsevier.com/locate/jbf

    Related research

    Keywords: Payout policy Dividends Share repurchases Taxes Corporate governance;

    References

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    Cited by:
    1. Henry, Darren, 2011. "Ownership structure and tax-friendly dividends," Journal of Banking & Finance, Elsevier, Elsevier, vol. 35(10), pages 2747-2760, October.
    2. Geiler, P.H.M., 2012. "Essays on executive remuneration contracting: Managerial power, corporate payout, and gender discrimination," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5590842, Tilburg University.

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