Share repurchases, dividends, and corporate distribution policy

This dissertation has two goals: to examine the empirical determinants of share repurchase policy and to examine the reasons for the increase in share repurchase activity in the mid-1980s. Of most interest is whether firms that repurchase pay less in dividends than comparable firms that do not repurchase. In other words, do firms substitute share repurchases for dividends? The main result is that firms that repurchase do not pay less in dividends than comparable firms which do not repurchase. High profitability and the presence of an ESOP are predictors of share repurchase activity. The increase in share repurchase activity in the mid-1980s appears to be the result, at least in part, of an increased use of share repurchases to distribute earnings