JOURNAL OF Financial ECONOMICS ELSEVIER Journal of Financial Economics 60(2001)3-43 www.elsevier.com/locate/econbase Disappearing dividends:changing firm characteristics or lower propensity to pay? Eugene F.Fama,Kenneth R.Frenchb.* "Graduate School of Business,University of Chicago,Chicago.IL 60637.USA Sloan School of Management,Massachusetts Institute of Technology.Cambridge.MA 02142.USA Received 7 January 2000;accepted 17 August 2000 Abstract The proportion of firms paying cash dividends falls from 66.5%in 1978 to 20.8% in 1999,due in part to the changing characteristics of publicly traded firms.Fed by new listings,the population of publicly traded firms tilts increasingly toward small firms with low profitability and strong growth opportunities -characteristics typical of firms that have never paid dividends.More interesting,we also show that regardless of their characteristics,firms have become less likely to pay dividends. This lower propensity to pay is at least as important as changing characteristics in the declining incidence of dividend-paying firms.C 2001 Published by Elsevier Science S.A. JEL classification:G35;G32 Keywords:Dividends;Payout policy;Stock repurchases;New listings *We acknowledge the comments of John Graham,Douglas Hannah,Anil Kashyap,Tobias Moskowitz G.William Schwert (the editor).Andrei Shleifer.Janice Willett.Paul Zarowin.and seminar participants at Harvard University,the University of Chicago,the National Bureau of Economic Research,the University of Rochester,and Virginia Polytechnical Institute.The referees, Harry DeAngelo and Rene Stulz,were particularly helpful. Corresponding author. E-mail address:kfrench@mit.edu (K.R.French). 0304-405X/01/S-see front matter C 2001 Published by Elsevier Science S.A Pl:S0304-405X(01)00038.-1
We acknowledge the comments of John Graham, Douglas Hannah, Anil Kashyap, Tobias Moskowitz, G. William Schwert (the editor), Andrei Shleifer, Janice Willett, Paul Zarowin, and seminar participants at Harvard University, the University of Chicago, the National Bureau of Economic Research, the University of Rochester, and Virginia Polytechnical Institute. The referees, Harry DeAngelo and ReneH Stulz, were particularly helpful. * Corresponding author. E-mail address: kfrench@mit.edu (K.R. French). Journal of Financial Economics 60 (2001) 3}43 Disappearing dividends: changing "rm characteristics or lower propensity to pay?
Eugene F. Fama
, Kenneth R. French
*
Graduate School of Business, University of Chicago, Chicago, IL 60637, USA Sloan School of Management, Massachusetts Institute of Technology, Cambridge, MA 02142, USA Received 7 January 2000; accepted 17 August 2000 Abstract The proportion of "rms paying cash dividends falls from 66.5% in 1978 to 20.8% in 1999, due in part to the changing characteristics of publicly traded "rms. Fed by new listings, the population of publicly traded "rms tilts increasingly toward small "rms with low pro"tability and strong growth opportunities } characteristics typical of "rms that have never paid dividends. More interesting, we also show that regardless of their characteristics, "rms have become less likely to pay dividends. This lower propensity to pay is at least as important as changing characteristics in the declining incidence of dividend-paying "rms.
2001 Published by Elsevier Science S.A. JEL classixcation: G35; G32 Keywords: Dividends; Payout policy; Stock repurchases; New listings 0304-405X/01/$ - see front matter
2001 Published by Elsevier Science S.A. PII: S 0 3 0 4 - 4 0 5 X ( 0 1 ) 0 0 0 3 8 - 1