The Evolution of Dividend Policy in the Corporation and in Academic Theory.

The harder we look at the dividend picture, the more it seems like a puzzle with pieces that just don\u27t fit together (Black, 1976). The purpose of this study is to examine the dividend phenomenon. The first essay of the dissertation investigates the origins, modifications and adaptations of corporate dividend payments to shareholders. Contemporary theoretical modeling to date has neglected to acknowledge the potential influence of dividend payment tradition in the formulation of dividend policy. The second essay examines the evolution of the theoretical attempts to explain dividend policy and empirical tests of these theories. The dividend paradigms are divided into models formulated in states with full information, models developed in states of informational asymmetries and models using behavioral rationales as the basis for their development. The second essay concludes with an analysis to determine if method of analysis, frequency of sampling observation or sample period influence the often contradictory results of the analyses. The dissertation\u27s third essay explores the executive compensation, dividend policy and capital structure determination process. This essay extends existing research on the policies in two ways. Firm level data is used here; many of the earlier works use industry data. The study also seeks to determine if the policy choice interactions implied by earlier work can be demonstrated using a system of equations