Table of Contents

1 Introduction. 2 Basic theory: The need to distribute FCF is foundational. 3 Security valuation problems, agency costs, and optimal payout policy. 4 Corporate payouts: Scale, concentration, and earnings linkage. 5 Payouts and earnings: A closer look. 6 Are dividends disappearing? 7 Why do dividends survive? 8 Signaling and the information content of dividends. 9 Behavioral influences on payout policy. 10 Clientele effects: Transaction costs, institutional ownership, and payout policy. 11 Controlling stockholders and payout policy. 12 Taxes and payout policy. 13 The advantages of stock repurchases. 14 Conclusion: What we know about payout policy and promising areas for future research. Appendix: Microsoft's dividend and stock buyback plans. References.