Why are corporate payouts so high in the 20 0 0s?

The average annual inflation-adjusted amount paid out through dividends and repurchases by public industrial firms is more than three times larger from 20 0 0 to 2019 than from 1971 to 1999. We find that an increase in aggregate corporate income accounts for 37% of the increase in aggregate annual payouts, and an increase in the payout rate accounts for 63%. Firms have higher payout rates in the 20 0 0s not only because they are older, larger, and have more free cash flow, but also because they pay out more of their free cash flow. Though firms spend less on capital expenditures in the 20 0 0s than before, capital expenditures decrease similarly for firms with payouts and for firms without. (c) 2021 Elsevier B.V. All rights reserved.