The basic conflict between corporate directors and shareholders over dividends is similar to the conflict between children and their parents over trust funds. The children prefer a quick distribution, and the parents prefer to control the money for the children's greater benefit.
One strong argument in favor of companies that pay dividends is that companies that don't pay dividends have a sorry history of blowing the money on a string of stupid diworseifications. I've seen this happen enouth times to begin to believe in the bladder theory of corporate finance, as propounded by Hugh Liedtke of Pennzoil; The more cash that builds up in the treasury, the greater the pressure to piss it away.
~ Peter Lynch, from One Up on Wall Street