Academic Affiliate Douglas Skinner Discusses Dividends in Recent New York Times Article
March 15, 2016
Analysis Group academic affiliate Douglas Skinner – a professor of accounting at the University of Chicago Booth School of Business – was recently interviewed as part of a New York Times article on current investor perceptions of dividends. The article, “Dividends, Wall Street's Battered Status Symbol” (February 13, 2016), examines reactions to changes in dividend payments in comparison with shifts in stock buyback programs.
In the article, Professor Skinner notes that investors expect companies with long historical records of maintaining or increasing dividends to continue these trends, and react negatively when dividends are lowered or discontinued. “Investors look at that record, and they count on it … After a while, the dividend becomes sacrosanct.” In contrast, investors react much less to changes in stock buyback programs. Professor Skinner notes that this is a puzzling comparison because, in economic terms, the two types of payouts amount to the same thing.