Corporate Payout Policy in France: Dividends vs. Share Repurchase
Posted: 12 May 2011
Date Written: May 1, 2011
In this study, I investigate on the patterns and the determinants of corporate payout policy in France. After being legalized in 1998, share repurchase has emerged as a significant payout policy; ratio of firms paying dividends has reduced from 77.65% in 1994 to 59.45% in 2004. In order to examine payout behaviour of French firms I start by classifying firms into four groups: firms that make no distributions; firms that pay dividends exclusively; firms that repurchase shares without paying dividends; and firms that both pay dividends and repurchase shares. Having these firms classified, I compare payout policy's stability for each group. Consistent with Grullon and Michaely (2002), I analyze the probability for a firm to maintain the existing payout policy or to switch to another, then; I examine the firm characteristics associated with each of the four payout policy types, using multivariate analysis.
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