سیاست تقسیم سود و بدست آمده/ کمک ترکیب سرمایه: آزمون نظریه چرخه زندگی

Consistent with a life-cycle theory of dividends, the fraction of publicly traded industrial firms that pay dividends is high when retained earnings are a large portion of total equity (and of total assets) and falls to near zero when most equity is contributed rather than earned. We observe a highly significant relation between the decision to pay dividends and the earned/contributed capital mix, controlling for profitability, growth, firm size, total equity, cash balances, and dividend history, a relation that also holds for dividend initiations and omissions. In our regressions, the mix of earned/contributed capital has a quantitatively greater impact than measures of profitability and growth opportunities. We document a massive increase in firms with negative retained earnings (from 11.8% of industrials in 1978 to 50.2% in 2002). Controlling for the earned/contributed capital mix, firms with negative retained earnings show virtually no change in their propensity to pay dividends from the mid-1970s to 2002, while those whose earned equity makes them reasonable candidates to pay dividends have a propensity reduction that is twice the overall reduction in Fama and French [2000, Journal of Financial Economics 76, 549–582]. Finally, our simulations show that, if well-established firms had not paid dividends, their cash balances would be enormous and their long-term debt trivial, thus granting extreme discretion to managers of these mature firms.

Dividends tend to be paid by mature, established firms, plausibly reflecting a financial life cycle in which young firms face relatively abundant investment opportunities with limited resources so that retention dominates distribution, whereas mature firms are better candidates to pay dividends because they have higher profitability and fewer attractive investment opportunities. Fama and French (2001), Grullon et al. (2002), and DeAngelo and DeAngelo (2006) all advance life-cycle explanations for dividends that rely, implicitly or explicitly, on the trade-off between the advantages (e.g., flotation cost savings) and the costs of retention (e.g., agency costs of free cash flow). The trade-off between retention and distribution evolves over time as profits accumulate and investment opportunities decline, so that paying dividends becomes increasingly desirable as firms mature. The literature offers only a rough empirical idea of the characteristics that differentiate firms that pay dividends from those that do not. Most notably, Fama and French (2001) find that firms with current high-profitability and low-growth rates tend to pay dividends, while low-profit/high-growth firms tend to retain profits. We test the life-cycle theory by assessing whether the probability a firm pays dividends is positively related to its mix of earned and contributed capital, i.e., whether firms with relatively high retained earnings as a proportion of total equity (RE/TE) and of total assets (RE/TA) are more likely to pay dividends. The earned/contributed capital mix is a logical proxy for the life-cycle stage at which a firm currently finds itself because it measures the extent to which the firm is self-financing or reliant on external capital. Firms with low RE/TE (RE/TA) tend to be in the capital infusion stage, whereas firms with high RE/TE (RE/TA) tend to be more mature with ample cumulative profits that make them largely self-financing, hence good candidates to pay dividends. The proportion of equity capital that is earned is conceptually distinct from (and in our sample uncorrelated with) current or short-term profitability, which is widely recognized since at least Lintner (1956) to affect dividend decisions. It is also a better measure of a firm's life-cycle stage (hence suitability to pay dividends) than its cash balances, because the source of the cash impacts the dividend decision. For example, high cash holdings can reflect the proceeds of a recent equity offering for a firm whose low RE/TE and RE/TA show it to be in the infusion instead of the distribution stage. Our evidence uniformly and strongly indicates that the probability a firm pays dividends increases with the relative amount of earned equity in its capital structure. For publicly traded industrials over 1973–2002, the proportion of firms that pay dividends is high when the ratio of earned to total common equity (RE/TE) is high and falls with declines in this ratio, reaching near-zero levels for firms with negligible retained earnings. Similarly, the proportion of dividend payers is high when earned equity is a large fraction of total assets and decreases (eventually approaching zero) as RE/TA declines. We find no such monotonic relation between the proportion of firms that pay dividends and total common equity (TE/TA), indicating that a firm's earned/contributed capital mix (and not its total equity relative to other sources of capital) is a key determinant of its decision to pay or not pay dividends. We control for firm size, current and lagged profitability, growth, total equity, cash balances, and dividend history using a broad variety of multivariate logit specifications, and we consistently observe a positive and highly significant relation between the probability that a firm pays dividends and its earned/contributed capital mix. The coefficients on RE/TE and RE/TA are of the predicted sign and highly significant in every logit model we run. Our logits also consistently reveal statistically significant relations between the probability a firm pays dividends and its size, profitability, and growth (as in Fama and French, 2001), indicating the earned/contributed capital mix affects the decision to pay dividends in a manner empirically distinct from other factors previously shown to affect the dividend decision. Our RE/TE and RE/TA measures have a stronger impact on the decision to pay dividends than do profitability and growth, the explanatory variables previously emphasized in the dividend literature. Specifically, the difference between low and high values of RE/TE is associated with a substantial difference in the probability of paying dividends for all but the highest size deciles of NYSE firms, with smaller but nontrivial differences for the largest firms. For firms the size of the median NYSE firm, the probability of paying dividends increases from about 50% to more than 80% as retained earnings increase from 10% to 90% of total equity. For firms at the 90th size percentile, the probability increase, from 80% to 95%, is smaller because the unconditional probability of paying dividends is already high for these large firms. The impact of firm size differences on the probability of paying dividends is also substantial, while profitability and growth differences have a relatively modest impact. For industrial firms, the incidence of firms with positive retained earnings declines from 88.2% in 1978 to 49.8% in 2002, a downtrend that closely parallels the large decline in dividend paying firms discovered by Fama and French (2001). Because firms with negative retained earnings have an estimated probability of paying dividends that is already close to zero, these firms show virtually no reduction in their propensity to pay dividends. Yet, this group receives roughly half the weight in extant empirical estimates of the recent overall reduction in propensity to pay. The implication is that, among the firms with positive RE/TE (which are those whose fundamentals make them reasonable candidates to pay dividends), the propensity to pay reduction is far greater than Fama and French's overall estimates. We find that, for firms with retained earnings of 30–80% of total equity, the propensity to pay reduction from the mid-1970s to 2002 is roughly 50%, which is about double Fama and French's overall estimates, making the unexplained propensity to pay decline even more puzzling than previously thought. Consistent with the life-cycle theory, the earned/contributed capital mix has a significant impact on the probability that a firm initiates or omits dividends. For the median firm, RE/TE (RE/TA) trends upward in the five years preceeding dividend initiations and downward in the five years preceeding omissions. These ratios do not change by large amounts over the years before initiation or omission, however, suggesting there is no definitive RE/TE- or RE/TA-based trigger point at which paying dividends becomes de rigueur. The typical dividend initiator and the typical omitter fall in the middle ground between the typical nonpayer (with relatively low RE/TE and smaller size) and the typical payer (with relatively high RE/TE and larger size). Finally, logit analyses of the initiation and omission decisions that parallel the main tests described above show the earned equity/contributed capital mix to be significant in all specifications, as we observe in cross section for the full sample. We conservatively estimate that, had the 25 largest long-standing dividend-paying industrial firms in 2002 not paid dividends, their cash balances would total $1.8 trillion (51% of total assets), up from $160 billion (6% of assets) and $1.2 trillion above their collective $600 billion in long-term debt. This exercise offers some indirect evidence supporting the agency cost-inclusive life cycle explanation for dividends since, had these 25 firms not paid dividends and kept their investment outlays unchanged, they would have huge cash balances and little or no leverage, vastly increasing managers’ opportunities to adopt policies that benefit themselves at stockholders’ expense. Moreover, because these firms systematically paid large dividends over many years, their behavior is inconsistent with a simple flotation cost/pecking order variant of the life-cycle theory in which the absence of agency costs implies that the optimal policy is to retain all earnings until there is zero probability the firm will ever need to incur the costs of raising outside capital. Section 2 presents our sampling procedure, descriptive statistics, and univariate analyses that relate the proportion of dividend paying firms to the earned/contributed capital mix. Section 3 reports our logit regressions that assess the relation between the probability that a firm pays dividends and its earned/contributed capital mix, controlling for profitability, growth, size, etc. Section 4 compares the quantitative impact on the probability of paying dividends of RE/TE, profitability/growth, and firm size. Section 5 documents the recent dramatic increase in firms with negative retained earnings and develops the implications for the Fama and French (2001) finding of a reduced propensity to pay dividends among industrial firms. Section 6 analyzes the impact of the earned/contributed capital mix on dividend initiations and omissions, while Section 7 examines the hypothetical consequences of a full retention policy for mature firms with long-standing dividend records. Section 8 summarizes our findings.

Consistent with a life-cycle theory of dividends, the fraction of publicly traded industrial firms that pays dividends is high when retained earnings are a large portion of total equity (and of total assets) and falls to near zero when most equity is contributed rather than earned. In a broad set of multivariate logit tests, we consistently observe a highly significant relation between the decision to pay dividends and RE/TE (and RE/TA), controlling for firm size, current and recent profitability, growth, total equity, cash balances, and dividend history, a relation that also holds for dividend initiations and omissions. The earned/contributed capital mix has a quantitatively greater impact on the probability that a firm pays dividends than do measures of current profitability and growth opportunities, the determinants of the decision to pay dividends that to date have received primary attention in the empirical payout literature. We also document a massive increase in firms with negative retained earnings (from 11.8% in 1978 to 50.2% in 2002), a trend that closely mirrors the decline in dividend payers identified by Fama and French (2001). When we control for the earned/contributed capital mix, we find that firms with negative retained earnings show virtually no change in their propensity to pay dividends from the mid-1970s to 2002, while those whose earned equity makes them reasonable candidates to pay dividends have a propensity reduction that is twice the overall reduction estimated by Fama and French. All our evidence supports a life-cycle theory of dividends, in which a firm's stage in that cycle is well captured by its mix of internal and external capital, so that dividend payers tend to have high earned equity relative to contributed capital, and nonpayers the reverse.