Disappearing Dividends, Catering Incentives and Agency Costs: International Evidence

39 Pages Posted: 16 Aug 2005

See all articles by Igor Osobov

Igor Osobov

Georgia State University, Department of Finance

David J. Denis

University of Pittsburgh

Date Written: July 2005

Abstract

We examine time-series evidence of dividend polices in several developed financial markets over the period 1989-2002. Consistent with trends in the U.S., our evidence indicates a declining propensity to pay dividends in Canada, the U.K., Germany, France, and Japan. This decline cannot be explained by the changing composition of publicly traded firms in each country. In addition, we test implications of the catering explanation for the declining propensity to pay dividends, but fail to find robust support for the hypothesis. We argue that both our evidence and prior evidence supporting the catering hypothesis is consistent with an agency cost explanation for dividends.

Keywords: Dividends, dividend policy, payout policy, disappearing dividends, catering, agency

JEL Classification: G35

Suggested Citation

Osobov, Igor V. and Denis, David J., Disappearing Dividends, Catering Incentives and Agency Costs: International Evidence (July 2005). Available at SSRN: https://ssrn.com/abstract=778024 or http://dx.doi.org/10.2139/ssrn.778024

Igor V. Osobov (Contact Author)

Georgia State University, Department of Finance ( email )

35 Broad St. 12th Fl
Atlanta, GA 30303
United States

David J. Denis

University of Pittsburgh ( email )

Katz Graduate School of Business
Pittsburgh, PA 15260
United States
412-648-1708 (Phone)

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