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Dividends, Share Repurchases, and the Substitution Hypothesis
Open accessAbstract
We show that repurchases have not only became an important form of payout for U.S. corporations, but also that firms finance their share repurchases with funds that otherwise would have been used to increase dividends. We find that young firms have a higher propensity to pay cash through repurchases than they did in the past and that repurchases have become the preferred form of initiating a cash payout. Although large, established firms have generally not cut their dividends, they also show a higher propensity to pay out cash through repurchases. These findings indicate that firms have gradually substituted repurchases for dividends. Our results also suggest that before 1983, regulatory constraints inhibited firms from aggressively repurchasing shares.
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Cited by
Economic Sources of Gain in Stock Repurchases
Chan, K., Ikenberry, D., & Lee, I. (2004) · Journal of Financial and Quantitative Analysis · doi:10.1017/s0022109000003987 · Cited by 264
Farre-Mensa, J., Michaely, R., & Schmalz, M. (2014) · Annual Review of Financial Economics · doi:10.1146/annurev-financial-110613-034259 · Cited by 224
Self-citationDid financialization reduce economic growth?
Tomaskovic-Devey, D., Lin, K.-H., & Meyers, N. (2015) · Socio-Economic Review · doi:10.1093/ser/mwv009 · Cited by 180
Metadata
- Authors
- Grullon, G., & Michaely, R.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2002-08
- Volume
- 57
- Issue
- 4
- Pages
- 1649-1684
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2138729574
- Cited by
- 1,467
- References
- 0
- FWCI
- 159.08
- Type
- journal article
- Language
- en
- Open access
- green
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
