Why Do Companies Pay Dividends?

DSpace/Manakin Repository

dc.contributor.author	Feldstein, Martin
dc.contributor.author	Green, Jerry
dc.date.accessioned	2009-08-06T15:26:29Z
dc.date.issued	1983
dc.identifier.citation	Feldstein, Martin, and Jerry Green. 1983. Why do companies pay dividends? American Economic Review 73, no. 1: 17-30.	en
dc.identifier.issn	0002-8282	en
dc.identifier.uri	http://nrs.harvard.edu/urn-3:HUL.InstRepos:3204679
dc.description.abstract	This paper presents a simple model of market equilibrium to explain why firms that maximize the value of their shares pay dividends even though the funds could instead be retained and subsequently distributed to shareholders in a way that would allow them to be taxed more favorably as capital gains. The two principal ingredients of our explanation are: (1) the conflicting preferences of shareholders in different tax brackets and (2) the shareholders' desire for portfolio diversification, we show that companies will pay a positive fraction of earnings in dividends. We also provide some comparative static analysis of dividend behavior with respect to tax parameters and to the conditions determining the riskiness of the securities.	en
dc.description.sponsorship	Economics	en
dc.language.iso	en_US	en
dc.publisher	American Economic Association	en
dc.relation.isversionof	http://www.jstor.org/stable/1803923	en
dash.license	LAA
dc.title	Why Do Companies Pay Dividends?	en
dc.relation.journal	American Economic Review	en
dash.depositing.author	Green, Jerry