| Summary: | 碩士 === 國立中央大學 === 財務金融研究所 === 93 === Corporations use cash dividends and stock dividends as the methods to distribute earnings to shareholders. While each method has received considerable attention in the academic literature, fewer studies examine the choice between cash dividends and stock dividends. In particular, we do not know what factors drive the choice between cash dividends and stock dividends and what, if any, information investors infer from this managerial choice. In this paper we analyze the relationship between the cash dividends and stock dividends on the NYSE, AMEX and NASDAQ. We start with a complete listing of announcements of dividends distribution code supplied by CRSP database. From those announcements, we annualize the dividends to integrate with financial variables supplied by COMPUSTAT database. The sample period contains two decades through 1984 to 2003. This study shows that firm size, investment opportunities and profitability have significant power in explaining relative payouts of cash dividends versus stock dividends. The univariate results tell a similar story to the multivariate results. The univariate comparisons suggest that cash dividend paying firms and stock dividend paying firms are noticeably different. Cash dividend paying firms have more retained earnings and operating cash flows with large firm size and historically high payout ratios. Unlike cash dividends, firms with paying stock dividends have higher capital expenditures and Tobin’s q which means firms have investment opportunities in the future. Finally, we use multinomial logit model to predict payout policy. Our multivariate analysis is consistent with the univariate comparisons discussed earlier and generally support the hypothesis that the financial flexibility inherent in the stock dividends distribution is also a consideration in the choice of payout methods, especially for higher capital expenditure firms.
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