| Abstract | This paper aims to contribute to the dividend puzzle by synthesizing theoretical distribution theories and real-world distribution analysis practices. This paper provides brief introductions to the dividend puzzle, dividend history, and investment tax history, reviews of the most widely researched distribution theories, and an application of economic theory to a financial industry test developed by famous investor Warren Buffet. My contribution to the dividend puzzle is incorporating the Law of Diminishing Marginal Utility into the Warren Buffet $1 Test to show points of optimal distribution for a firm. Additionally, my analysis demonstrates how certain external factors can affect investor preference for dividends. This report contains several equations and multiple graphs to illustrate the subject matter. I hope the structure of this paper promotes future research on the topic. |
