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Shareholder Preferences and Dividend Policy

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  • Brennan, Michael J
  • Thakor, Anjan V

Abstract

This paper develops a theory of choice among alternative procedures for distributing cash from corporations to shareholders. Despite the preferential tax treatment of capital gains for individual investors, it is shown that a majority of a firm's shareholders may support a dividend payment for small distributions. For larger distributions, an open-market stock repurchase is likely to be preferred by a majority of shareholders and, for the largest distributions, tender offer repurchases dominate. Copyright 1990 by American Finance Association.

Suggested Citation

  • Brennan, Michael J & Thakor, Anjan V, 1990. "Shareholder Preferences and Dividend Policy," Journal of Finance, American Finance Association, vol. 45(4), pages 993-1018, September.
  • Handle: RePEc:bla:jfinan:v:45:y:1990:i:4:p:993-1018
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