Why do firms pay dividends? If they didn't their asset and capital structures would eventually become untenable as the earnings of successful firms outstrip their investment opportunities. Had they not paid dividends, the 25 largest long-standing 2002 dividend payers would have cash holdings of...

Aggregate real dividends paid by industrial firms increased over the past two decades even though, as Fama and French (2001, JFE) document, the number of dividend payers decreased by over 50%. The reason is that (i) the reduction in payers occurs almost entirely among firms that paid very small...

The Times Mirror Company, a NYSE-listed Fortune 500 firm controlled for 100 years by the Chandler family, hired an industry outsider as CEO in 1995 following an extended period of poor operating and stock price performance under non-family management. This change was apparently an unintended...

In 1986 Pacific Lumber (PL). the largest private owner of old-growth redwood trees, was acquired in a highly leveraged hostile takeover by MAXXAM Group. MAXXAM subsequently doubled the rate at which PL harvested its ancient redwoods, precipitating 10 years of environmental protests and intensive...

We combine elements of the pecking order and trade-off theories of capital structure to develop a more powerful and empirically descriptive theory in which firms have low long-run leverage targets, debt issuances are temporary deviations from target to meet unanticipated capital needs, firms...

This paper argues that we should abandon MM (1961) irrelevance as the foundation for teaching payout policy, and instead emphasize the need to distribute the full value generated by investment policy (quot;full payoutquot;). Because MM's assumptions restrict payouts to an optimum, their...

Contrary to Miller and Modigliani (1961), payout policy is not irrelevant and investment policy is not the sole determinant of value, even in frictionless markets. MM ask quot;Do companies with generous distribution policies consistently sell at a premium above those with niggardly payouts?quot;...