In addition to distributing dividends and repurchasing shares, directly distributing cash to shareholders in order to reduce capital is an alternative form of paying out. A firm can alter its capital structure by repurchasing shares or by reducing capital. This paper employs the approach of DeAngelo, DeAngelo, and Stulz (2006) by using the ratio of retained earnings to equities as a proxy for corporate life cycle to illustrate that when a firm decides to reduce capital, thereby changing the capital structure, a mature firm is prone to reducing capital by directly distributing cash instead of repurchasing shares and cancelling them. Additionally, a firm with low leverage is more likely to directly distribute cash to shareholders for reducing capital, when it comes to reducing capital.