Dividend Policy Revisited

Abstract

This paper provides a review and synthesis of the literature and chronicles changing perspectives on corporate dividend policy. The importance of dividends as part of an investor's total return has declined over time while the role of share repurchases has increased. No consensus exists on a single explanation for paying dividends or repurchasing shares. Existing models and theories of dividend policy may be too simplistic, given that multiple factors determine firms; dividend decisions. A need exists to develop a new paradigm to deal with the dividend puzzle.