In follow-up work that I will submit for review in coming week, I ask what the consequences are for other stakeholders?
sneak peak: ratchet events cause persistently: 1) higher payout ratios, 2) higher indebtedness and 3) lower investments.
Hopefully coming soonish!

2) At the firm level each ratchet event (falling profits, steady payouts) persistently raises the payout ratio for a decade (staggered DiD)

Payouts fractionally adjust upwards in good times but are downward rigid in bad times - just like a ratchet.
What does the data say?
1) Aggregate payout ratios are structured along the frequency of ratchet behaviour, across size, sector & region (although differences do exist)

Payout ratios ⬆️not because of some shareholder bonanza, but rather because fluctuations in profits are not met by fluctuations in shareholder income.
=> Upward trend in both payout ratios and profits can emerge despite falling payout ratios whenever profits rise!

And here is a sneak peak in my next paper on the consequences for investments:

3) Over the recent decades, shareholders have been increasing their claim over firm resources, while the stock market serves less a a source of funds for new or existing companies.

1) Stock wealth in Belgium is not negligible, but what crucially matters is its distribution. Wealth is very unequally distributed, financial wealth already much more so but stock wealth is the item that is most unequal, certainly in Belgium where we have a pay as you go pension system

Daarbij is cruciaal: niet de toename van dividenden of buybacks verdringt investeringen, maar juist hun neerwaartse rigiditeit! Als bedrijf het tijdelijk moeilijk heeft weigeren aandeelhouders te delen in de klappen, waardoor bedrijf genoodzaakt is te snijden in investeringen en/of schuld aan t gaan

Payouts fractionally adjust upwards in good times but are downward rigid in bad times - just like a ratchet.

1) Aggregate payout ratios are structured along the frequency of ratchet behaviour
2) At the firm level each ratchet event persistently raises the payout ratio for a decade (staggered DiD)