In frictionless markets dividends are irrelevant to firm value (Miller and Modigliani 1961), but in practice we propose that they affect valuation and stewardship, roles traditionally filled by accounting information. Using a variety of econometric methods to control for differences between...

Yes. We show that dividend changes contain information about highly persistent changes in future economic income. Three methodological differences lead us to different conclusions from the extant literature: (i) we use an “event window approach” to cleanly delineate earnings after dividend...

We provide empirical evidence that the level of the dividend signals long-horizon future earnings and that the earnings information embedded in the dividend has implications for expected returns. From an earnings information perspective, we show the level of the dividend is associated with up to...

We provide evidence that firms with weak investment opportunities (those whose current earnings justify a greater valuation than firms with strong investment opportunities) signal their permanent earnings level through their dividends. In the cross-section, we show that both dividend levels and...

Minority shareholders in countries with weak institutions face greater agency conflicts related to the separation of ownership and control. To mitigate these agency conflicts, we hypothesize that firms will return more of current earnings to investors as dividends, leaving fewer resources to be...

We hypothesize that, in weak-institution countries, firms adjust the ‘timing’ of dividend payments by committing to distribute a percentage of current earnings as dividends, revealing the extent of firm-level agency conflicts to future investors and facilitating the raising of external...

Prior research finds that firms pay dividends prior to tax rate increases (“dividend acceleration”), especially when insider ownership is high (Hanlon and Hoopes 2014). However, this research does not consider the preferences of other investors, many of which are tax-insensitive. On average,...

Prior research finds that firms pay special dividends before a dividend tax increase. We examine the real effects of this decision, finding that firms incur costs to pay these tax-motivated special dividends. Specifically, firms reduce investment and repurchases to pay these dividends. Further,...