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The research aims to explore the changing relationship between corporate payouts and profits over time.

The relation between payouts and profits over time

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This analysis examines how corporate payouts relate to profits over decades, suggesting increasing dependence on profitability.

The research aims to explore the changing relationship between corporate payouts and profits over time.
Analyzed annual Compustat data for U.S. industrial firms from 1980 to 2022
Employed a piecewise regression model
Accounted for asymmetric responses to profits and losses
Incorporated contemporaneous, past, and future profits
Sensitivity of payouts to profits has increased over time
Past profits were identified as the strongest predictor of payouts
Current profits remained significant while future profits had a modest effect
Including losses decreased the sensitivity of payouts to earnings
Larger firms and those with high Tobin's Q exhibited greater sensitivity to profits

Henry Jarva (2026) studied this question.

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