A Conclusion for Most CEOs: Your Corporation Should Not Pay Dividends

Abstract

In previous articles by this author, he concluded that share repurchase tends to be more desirable than cash dividends, from a shareholder’s point of view. In his previous articles, however, the author notes that he failed to take into account the possibility that corporations, in the present tax environment, should normally pay zero dividends. In this article, the author concludes that corporations should normally pay zero cash dividends, unless their stockholders do not pay income taxes.