The Evolving Relation Between Dividends and Flexible Payouts: A Different Evolution

52 Pages Posted: 5 Mar 2019 Last revised: 28 Sep 2020

See all articles by Seth Armitage

Seth Armitage

University of Edinburgh - Accounting and Finance

Ronan Gallagher

University of Edinburgh - Edinburgh Business School

Date Written: September 1, 2020

Abstract

We study payout by U.K. listed companies during 1993-2018. Regular dividends remain the dominant channel, but flexible payouts (special dividends and repurchases) have grown, and they make total payout more responsive to earnings. Flexible payouts are used to augment regular dividends: few companies pay out by flexible means only, and tests indicate that they augment rather than replace regular dividends. Comparison with U.S. evidence shows that U.K. companies make greater use of dividends (including specials) in relation to repurchases, and have a greater willingness to change regular dividend per share.

Keywords: Payout Policy, Dividends, Special Dividends, Repurchases

JEL Classification: G35

Suggested Citation

Armitage, Seth and Gallagher, Ronan, The Evolving Relation Between Dividends and Flexible Payouts: A Different Evolution (September 1, 2020). Available at SSRN: https://ssrn.com/abstract=3334507 or http://dx.doi.org/10.2139/ssrn.3334507

Seth Armitage (Contact Author)

University of Edinburgh - Accounting and Finance ( email )

29 Buccleuch Place
Edinburgh, EH8 9JS
United Kingdom
44 131 650 3794 (Phone)

Ronan Gallagher

University of Edinburgh - Edinburgh Business School ( email )

29 Buccleuch Pl
Edinburgh, Scotland EH8 9JS
United Kingdom

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