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An International Analysis of Dividend Payment Behavior
Author(s) -
Ferris Stephen P.,
Sen Nilanjan,
Unlu Emre
Publication year - 2009
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2009.02126.x
Subject(s) - dividend , dividend payout ratio , payment , economics , sample (material) , civil law (civil law) , business , dividend policy , monetary economics , demographic economics , law , commercial law , finance , political science , chemistry , chromatography
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.