【文章內(nèi)容簡介】 buted as dividends. In contrast, this paper views the amount of cash to be distributed as exogenously given. It consider three forms of disbursement: dividebd declaration, nonproportionate share repurchase through open market operation, and nonproportionate share repurchase through tender offer. Brennan and Thakor assume that there are two classes of shareholders – informed and uninformed. They show that in a tender offer, the uninformed shareholder always tenders, whereas the informed holds onto his/her shares. The situation is reversed in an open market operation, where the informed shareholder always sell his/her holding and the uninformed never does. 4. Free cash flow hypothesis The rich theoretical development in modelling dividends as signals of private managerial/entrepreneurial information also gave rise to empirical research seeking to determine the fit of the signalling theory to real world data. Typically, the empirical literature attempted to test the signalling paradigm counterpoised against an alternative rationale for dividends advanced by Jensen (1986), based on the principal agent framework. According to this framework, dividends are used by shareholders as a device to reduce overinvestment by managers. The managers control the firm。 therefore, they might invest cash in projects with negative present values, but which increase the personal utility of the managers in some way. A dividend reduces this free cash flow and thus reduces the scope for overinvestment. The two most cited works in this genre are the papers by Easterbrook (1984) and by Jensen (1986). Unfortunately, neither of these papers try to model the situation。 rather, they put forward plausible hypotheses. On the one hand, Easterbrook (1984) hypothesizes that dividends are used to take away the free cash from the control of the managers and pay it off to shareholders. This ensures that the managers will have to approach the capital market in order to meet the funding needs for new projects. The need to approach the capital markets imposes a discipline on the managers, and thus reduces the cost of monitoring the managers. Additionally, Easterbrook hypothesizes that the imperative to approach the capital market also acts as a counterweight to the managers’ own risk aversion. Jensen (1986) on the other hand, contends that in corporations with large cash flows, managers will have a tendency to invest in low return projects. According to Jensen, debt counters this by taking away the free cash flow. Jensen contends that takeovers and mergers take place when either the acquirer has a large quantum of free cash flow or the acquired has a large free cash flow which has not been paid out to stakeholders. Although Jensen does not deal with the issue of dividends, empirical researchers of dividend policy often use Jensen’s article for motivating tests of the free cash flow hypothesis of dividend empirical evidence on the three hypotheses are mixed, as we observe in Table I. Dividend policy thus continues to remain a puzzle. We can however enumerate some interesting stylized facts. In Table II we pile the stylized facts as they emerge from a study of the empirical literature. 5. Conclusion We have seen that the empirical evidence is equivocal about the existing theories of dividend policy. Research has discovered a large number of stylized facts but the explanation of dividend policy in an integrated framework still eludes us. In his PhD dissertation, Bhattacharyya (2020) explains dividend policy by using the asymmetric information paradigm. However, unlike the signalling mo