An International Analysis of Dividend Payment Behavior

27 Pages Posted: 12 May 2009

See all articles by Stephen P. Ferris

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Nilanjan Sen

Nanyang Technological University (NTU) - Nanyang Business School

Emre Unlu

University of Nebraska at Lincoln

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.

Suggested Citation

Ferris, Stephen P. and Sen, Nilanjan and Unlu, Emre, An International Analysis of Dividend Payment Behavior. Journal of Business Finance & Accounting, Vol. 36, Nos. 3-4, pp. 496-522, April/May 2009. Available at SSRN: https://ssrn.com/abstract=1400371 or http://dx.doi.org/10.1111/j.1468-5957.2009.02126.x

Stephen P. Ferris (Contact Author)

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

Nilanjan Sen

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Singapore, 639798
Singapore

Emre Unlu

University of Nebraska at Lincoln ( email )

Lincoln, NE 68588
United States

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