The modern study of payout policy is rooted in the irrelevance propositions developed by Nobel Laureates Merton Miller and Franco Modigliani. Payout policy is irrelevant when capital markets are perfect, when there is no asymmetric information, and when the firm’s investment policy is fixed. Relaxing these assumptions leads to a role for payout policy to control agency problems and convey information to investors. Although changes in dividend policy are associated with changes in firm value, there is mixed evidence regarding tax effects and little evidence that payout decisions are driven by motives to signal true firm value to investors. The evidence does support a link between payout decisions and conflicts of interest between the firm’s various claimholders. This chapter also surveys the evidence relating to share repurchases as an alternative form of payout and describes recent behavioral theories of payout policy.