Graduation Year


Date of Submission


Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Benjamin Gillen

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In this paper I explore the potential signaling capability that payout behavior, in the forms of dividends and share repurchases, has on the profitability of a firm. To do so, I analyze the relationship that dividends paid, share repurchases, and total payout have with asset turnover, return on assets, and EBITDA margin across different time structures. Next, I aim to understand if there is a significant differential impact of negative payout growth compared to positive payout growth, on the growth of the same performance measures above. I found that an increase in share repurchases and total payout both lead to an increase in profitability; however, it is to such a small magnitude that these results are not economically impactful. Dividends do not reveal any clear relationship. Also, there is no clear differential impact of negative growth for any of the payout metrics studied. Reported payouts by firms may be correlated with performance to some extent, but ultimately do not serve as strong signals for future performance.