Using a sample of dividend-paying firms, we show that much of the variation in accruals and real activities can be explained by firms' different performance trajectories. High (low) performance firms spend more (less) on SG&A and CAPEX and hold what appear to be abnormally low (high) levels of...

Many firms, even those that are cash rich, routinely engage in costly borrowing and, more rarely, equity issuance in order to finance their payouts. A reported motive for this payout-financing behavior is the sheltering of corporate income tax. We present a model of a firm that maximizes its...

Many firms, even those that are cash rich, routinely engage in costly borrowing and, more rarely, equity issuance in order to finance their payouts. A reported motive for this payout-financing behavior is the sheltering of corporate income tax. We present a model of a firm that maximizes its...