This has led to the conclusions regarding share repurchases and attempts to attract institutional investors as expressed above. These findings are strengthened by responses of a great number of executives who tend not to rely on dividends as disciplinary mechanisms and thus aim to differentiate from competitors via operational focus.
Another important element that has emerged in payout policy decisions is heuristic mechanisms in vogue among executives who derive rules from assumptions about the expectations and behavior of stakeholders on the outside. The result of such rules is bundling up of certain actions taken by executives and common perceptions which include inertia in dividend payout, staying close to the actions taken by competitors and having a broad investor base. This is complemented by the efforts to maintain favorable credit ratings, to the extent that most managers would prefer to reduce debt if dividends or share repurchases are foregone, the latter still bring the preferable option on account of the greater flexibility accorded.