This paper uncovers an increasing proportion of quoted UK companies omitting cash dividends. Using a large panel of quoted UK companies, we estimate models for the incidence of dividend omissions and cuts as functions of financial characteristics including cash flow, leverage, investment opportunities, investment and company size. These variables account for most of the increase in omission sin...

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 ca...

Cash-flow Notation: We use (c0, c1, . . . , ci, . . . , cn) to denote the series of cash-flows where ci is received at time t = i . The length of a period, i.e. the interval of time between t = i and t = i + 1, will usually be understood from the context. Negative cash-flows refer to cash payments. The initial cash-flow, c0, will often be negative while the remaining cash-flows are positive. Th...

We compute the value of a firm that pays its cash flows each period through share repurchases in a dynamic environment where personal taxes are paid on realized capital gains and dividends. These results provide a measure of the personal tax advantages of equity financing relative to debt financing, which are often cited as increasing the cost of debt. The initial price of the firm depends on t...

We derive the optimal dynamic contract in a continuous-time principal-agent setting, in which both investors and the agent learn about the firm’s profitability over time. Because investors learn about the firm’s future profitability from current output, which also depends upon the agent’s actions, deviations by the agent distort investors’ beliefs. We characterize the optimal contract, and show...

This paper develops a simple signaling model whereby high valuation firm uses levels of investment, debt and dividends to convey information to the market regarding its valuation. Conditions are determined under which investment, debt and dividends are employed in a separating Nash equilibrium. Unlike many other signaling models where the source of asymmetric information concerns only the mean ...

We investigate the relative informativeness of earnings and dividends for firms with dual class capital structures. In these firms, two classes of common stock create a separation between cash flow rights and voting rights. Despite the concentrated ownership in the dual class firms, we find significantly lower informativeness of earnings, in the form of a weaker returns-earnings association, th...

China has some unique institutional features. For example, the shares of listed firms are segmented into negotiable and nonnegotiable. The controlling shareholders, usually connected to the government, hold nonnegotiable shares. We examine how these institutional features affected cash dividend payments in China during the period 1994-2006. We find that, despite China’s unique institutional set...

We report on a large number of laboratory market experiments demonstrating that a market bubble can be reduced under the following conditions: 1) a low initial liquidity level, i.e., less total cash than value of total shares, 2) deferred dividends, and 3) a bid–ask book that is open to traders. Conversely, a large bubble arises when the opposite conditions exist. The first part of the article ...