The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Dividend Policy

  • David J. Denis
  • John J. McConnell
Reference work entry


Dividends represent the primary means by which invested capital is returned to common stockholders. In this article we summarize the development of academic thinking on dividend policy, focusing on three primary perspectives: (a) the effect of dividend policy on common stock value and firm performance, (b) the determinants of dividend policy, and (c) macroeconomic trends in the propensity of firms to pay dividends.


Agency costs Asymmetric information Capital gains Capital gains taxation Dividend change Dividend policy Dividend taxation Dividends Manager–shareholder conflict Modigliani–Miller theorem Regular vs special dividends Stock repurchases Stockholders 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • David J. Denis
    • 1
  • John J. McConnell
    • 1
  1. 1.