This paper offers a new explanation of the dividend puzzle, based upon a model in which firms attempt to signal … through a dividend reinvestment plan), despite the fact that this appears to create gratuitous tax liabilities. In addition to … providing an explanation for the dividend puzzle, I also derive a number of strong results concerning corporate payout decisions …

We investigate dividend smoothing behaviors of approximately 6,000 firms from 28 countries. The data find a wide … variation in the extent of dividend smoothing across countries, while US firms smooth dividends the most. Firms with a … concentrated ownership structure adjust their dividends quickly, especially when the target dividend level is lower than dividends …