Shareholder Preferences and Dividend Policy
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- Author(s): MICHAEL J. BRENNAN, ANJAN V. THAKOR
- Published: Apr 30, 2012
- Pages: 993-1018
- DOI: 10.1111/j.1540-6261.1990.tb02424.x
This paper develops a theory of choice among alternative procedures for distributing cash from corporations to shareholders. Despite the preferential tax treatment of capital gains for individual investors, it is shown that a majority of a firm's shareholders may support a dividend payment for small distributions. For larger distributions an open market stock repurchase is likely to be preferred by a majority of shareholders, and for the largest distributions tender offer repurchases dominate.