This article studies the dividend payout ratio of forty-tour Chilean companies that were publicly traded during 1993 and 1994. We consider three alternative hypotheses -cash flow signalling, free cash flow and the ownership structure- as explanations for the dividend payout ratio. The results obtained from running a Wilcoxon test show that firms with higher dividend payout ratios grow less. On the other hand, regression analysis shows the same result and also reports that firms with higher dividends have less concentrated ownership stmcture. Finally, as in other studies, we find that linns with higher dividend payout ratios are also bigger linns.