These are flotation costs, taxes and transactions costs. Due to these frictions there is probably a bias toward the retention of cash by the company. This is the passive residual dividend policy. The trouble with the passive dividend policy is that it is not observed in practice. Companies do not have lumpy, or erratic dividend payout records.
Companies tend to have smooth payouts.
This suits their shareholders. Some of the shareholders will be institutions that will rely on the predictability of the dividend payments. This achieved through smooth dividends using signals to relay good news. If a passive residual policy was pursued, the institution would not know one year to the next what the dividend was going to be. The market value of a company's shares is the discounted value of all of the future dividends that the current shareholders are expected to receive.