An International Analysis of Dividend Payment Behavior

Authors

  • Stephen P. Ferris,

    1. The first author is from the Department of Finance, University of Missouri, USA. The second author is from the Department of Finance, Nanyang Technological University, Singapore. The third author is from the Department of Finance, University of Nebraska-Lincoln, USA. They would like to thank Martin Walker (editor), for his many helpful suggestions on prior versions of this paper as well as the comments of the discussant, Graham Partington, and delegates at the JBFA Capital Markets Conference, University of Lancaster, May 2008.
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  • Nilanjan Sen,

    1. The first author is from the Department of Finance, University of Missouri, USA. The second author is from the Department of Finance, Nanyang Technological University, Singapore. The third author is from the Department of Finance, University of Nebraska-Lincoln, USA. They would like to thank Martin Walker (editor), for his many helpful suggestions on prior versions of this paper as well as the comments of the discussant, Graham Partington, and delegates at the JBFA Capital Markets Conference, University of Lancaster, May 2008.
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  • Emre Unlu

    Corresponding author
    1. The first author is from the Department of Finance, University of Missouri, USA. The second author is from the Department of Finance, Nanyang Technological University, Singapore. The third author is from the Department of Finance, University of Nebraska-Lincoln, USA. They would like to thank Martin Walker (editor), for his many helpful suggestions on prior versions of this paper as well as the comments of the discussant, Graham Partington, and delegates at the JBFA Capital Markets Conference, University of Lancaster, May 2008.
      * Address for correspondence: Stephen P. Ferris, Department of Finance, 404 Cornell Hall, University of Missouri, Columbia, MO 65211-2600, USA.
      e-mail: ferriss@missouri.edu
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* Address for correspondence: Stephen P. Ferris, Department of Finance, 404 Cornell Hall, University of Missouri, Columbia, MO 65211-2600, USA.
e-mail: ferriss@missouri.edu

Abstract

Abstract:  This study investigates patterns in dividend payment across nine common law and sixteen civil law countries over 1994-2007. We begin by examining whether the recent decline in the number of dividend payers is solely a US phenomenon or part of a more global trend. We find that at the beginning of our sample period, 72% of our sample firms pay dividends, but by 2007, this percentage decreases to 55%, with the decline more acute in common law countries. Our analysis further shows that the growing incidence of non-dividend paying firms can be explained by an increase in the percentage of firms that have never paid dividends. We find that common law firms are less likely to initiate new dividend programs than those in civil law nations, although they tend to have more abundant growth opportunities. We further establish that this global decline in the propensity to pay dividends is more pronounced in firms incorporated in common law jurisdictions. Finally, we find that both the percentage increase in aggregate dividends and the dividend payout ratio is higher in civil law countries.

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