Corporate Payout Policy in Australia and a Test of the Life Cycle Theory

Australian School of Business Research Paper No. 2010 ACCT 03

41 Pages Posted: 10 Mar 2010

See all articles by Jeffrey Coulton

Jeffrey Coulton

UNSW Business School

Caitlin M. S. Ruddock

UNSW Australia Business School, School of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: March 9, 2010

Abstract

We provide evidence on the frequency and size of corporate payouts by Australian firms, and test whether the life cycle theory explains Australian payout policies. Regular dividends remain the most popular mechanism for distributing cash to shareholders, despite a slight decline in the proportion of dividend payers since the relaxation of buy-back regulations in 1998. Off-market share buy-backs return the largest amount of cash to shareholders. Dividend paying firms are larger, more profitable, and have less growth options that non-dividend paying firms. Consistent with the life cycle theory, we observe a highly significant relation between the decision to pay regular dividends and the proportion of shareholders’ equity that is earned rather than contributed.

Keywords: Dividends, buy-backs, payout policy, life cycle theory

JEL Classification: G35, G32

Suggested Citation

Coulton, Jeffrey J. and Ruddock, Caitlin M. S., Corporate Payout Policy in Australia and a Test of the Life Cycle Theory (March 9, 2010). Australian School of Business Research Paper No. 2010 ACCT 03, Available at SSRN: https://ssrn.com/abstract=1567306 or http://dx.doi.org/10.2139/ssrn.1567306

Jeffrey J. Coulton (Contact Author)

UNSW Business School ( email )

UNSW Business School
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Sydney, NSW 2052
Australia
+61293855811 (Phone)
+93855925 (Fax)

Caitlin M. S. Ruddock

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia
+612 9385 5806 (Phone)
+612 9385 5925 (Fax)

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