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Why Are Corporate Payouts So High in the 2000s?

Author

Listed:
  • Kahle, Kathleen M.

    (U of Arizona)

  • Stulz, Rene M.

    (Ohio State U and European Corporate Governance Institute)

Abstract

The average annual inflation-adjusted amount paid out through dividends and repurchases by public industrial firms is more than three times larger from 2000 to 2019 than from 1971 to 1999. We find that an increase in aggregate corporate income accounts for 37% of the increase in aggregate annual payouts and an increase in the payout rate accounts for 63%. Firms have higher payout rates in the 2000s not only because they are older, larger, and have more free cash flow, but also because they pay out more of their free cash flow. Though firms spend less on capital expenditures in the 2000s than before, capital expenditures decrease similarly for the firms with payouts and for firms without.

Suggested Citation

  • Kahle, Kathleen M. & Stulz, Rene M., 2020. "Why Are Corporate Payouts So High in the 2000s?," Working Paper Series 2020-20, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    • Handle: RePEc:ecl:ohidic:2020-20
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    Cited by:

    1. Viral V. Acharya & Guillaume Plantin, 2019. "Monetary Easing, Leveraged Payouts and Lack of Investment," NBER Working Papers 26471, National Bureau of Economic Research, Inc.
    2. Sirio Aramonte, 2020. "Mind the buybacks, beware of the leverage," BIS Quarterly Review, Bank for International Settlements, September.

    More about this item

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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