At the latest Annual Shareholder Meeting, one delegate was asking the question why the company (Gianluca SpA) is not paying out dividends, despite accumulating high Free Cash Flows to Equity year over year. The delegate used the following quote: Although a number of theories have been put forward in the literature to explain their pervasive presence, dividends remain one of the thorniest puzzles in corporate finance Allen, Bernardo and Welch (2000: p 2499) Outline why dividends remain a puzzle for financial economists. Drawing on relevant academic literature and recent corporate practice, critically evaluate the main theoretical explanations for dividend pay-out policy as well as capital structure. Which theory do you think offers the best explanation of why companies pay or do not pay dividends?