The relationship between earnings and cash payout in forms of dividend payments and share repurchases
MetadataShow full item record
- Master Thesis 
In the following review, the results from Fama and French (2001a) and Harry DeAngelo, Linda DeAngelo, and Douglas J. Skinner (2004) are replicated while the analysis was extended to a more recent period which included stock repurchases. I examined dividend concentration among US industrial firms over the 1985-2011 period whilst comparing the absolute changes from 2000 to 2011. I observed that the number of dividend payers increased by 16 firms from 2000 to 2011, whereas aggregate dividend substantially increased by 124% during the same period of time. Furthermore, there was seemingly a stronger positive relation between level of earnings and dividend payments in 2011 compared to that of 2000. In this recent survey, level of earnings and share repurchases were seen as positively correlated during 1978 to 2011. My observations suggest of higher concentration of cash payout via stock repurchases over 1985- 2011, which indicates that firms with higher level of earnings spend more on share repurchases. Moreover, a very large proportion of share buy-back is completed by top dividend payers that distribute substantial portion of dividends. Such phenomenon has remained unchanged in the last decades.