(FORTUNE Magazine) – As every schoolboy who got his MBA at the University of Chicago knows, there is no compelling reason for corporations to pay dividends. Empirical studies have shown that real-world returns to shareholders are not raised by paying dividends. Lots of companies with low or nonexistent dividends (e.g., Berkshire Hathaway) have long yielded above-average returns. For persuasively explaining why dividend payouts are irrelevant to stock values, Merton H. Miller of Chicago recently won a Nobel Prize. Well, okay, Merton also explained a few other things to get the prize. Still, you would have hoped not to see so much cloudy thinking about dividends in the very month (December) they gave him the loot ($230,000) in Stockholm. Miller has tried hard to make his ideas about corporate finance accessible to the average unwashed investor. For example, he tells the famous Yogi Berra story. It seems that a pizza salesman in the dugout asks Yogi whether he wants his pie sliced into four pieces or eight. (Why he is selling pizza in the dugout has never been explained.) ''Better make it eight,'' Berra answers. ''I'm feeling hungry tonight.'' Point of this fable: that the corporation's value is independent of its financial structure. You can slice up the company any way you want, but you cannot (leaving aside tax considerations) create more value by rearranging your mix of equity and debt. Miller also keeps reminding us that his proposition on dividends ''amounts to saying that if you take money from your left-hand pocket and put it in your right-hand pocket, you are no better off.'' In other words, the extra cash in one pocket is offset by the loss of your company's investable capital in the other pocket.

And yet belief in the transcendent importance of dividends may be invincible. Take, as Henny Youngman might put it, the banks. Short of capital for years, they have nevertheless persisted in paying out substantial dividends -- even when the funds used for those payments were clearly coming out of bank capital. As consultant Joel Stern explained a while back in Corporate Finance, seven of ten prominent money-center banks depended entirely on the issuance of new stock to finance their dividend payments in the period 1983-87. At year-end 1990, the banks are really short of capital, and state and federal regulators are leaning hard on them to do something about it. But even in this bleak environment, the banks are hanging tough on dividends. Beleaguered Manufacturers Hanover has just stunned everybody by not cutting its dividend in the face of sharply lower earnings. Also not cutting was Security Pacific, which lost $360 million. Citicorp did finally reduce its dividend, obviously with reluctance and less than two weeks after its chairman had once again told security analysts that not paying dividends was a ''highly inefficient'' way to raise capital. Which somehow seems like saying that not buying a yacht is an inefficient way to raise rent money. Possibly you are a director who does not buy this analogy. The world is full of financial executives, not to mention financial journalists, who still take it for granted that paying out dividends boosts share values. Not long after the Wall Street Journal ran a thoughtful, Nobel-related piece about the intellectual contributions of Miller and two other prize-winning professors of finance (Harry Markowitz and William Sharpe), news stories in the Journal were matter-of-factly noting that in the months ahead, the dividend cut would of course ''make Citicorp's common shares less attractive.'' Some editor should be selling pizza.