 Another reason for economists to be puzzled is that equity holders pay a higher tax rate on dividend payouts compared to capital gains from the firm repurchasing shares as an alternative payout policy.The puzzle evolved from the Modigliani-Miller theorems of 1959 and 1961.The reasons for the dividend puzzle have been attributed to a wide range of factors, including uncertainties, psychological/behavioral economics issues, tax-related matters, and asymmetric information.