Dividend Policy in the European Union

41 Pages Posted: 4 Mar 2007

See all articles by J. Henk von Eije

J. Henk von Eije

University of Groningen - Faculty of Economics and Business

William L. Megginson

University of Oklahoma

Multiple version iconThere are 2 versions of this paper

Date Written: December 2006


Using a unique database of over 3400 listed industrial companies, we examine the evolution of dividend policy from 1989 to 2003 in the fifteen nations that were members of the European Union in May 2004. As in the United States, the fraction of European firms paying dividends declines dramatically over this period, from 91 to 62 percent of listed companies, while total real dividends paid and dividend payments as a fraction of total corporate profits increase significantly. Dividends and earnings are concentrating as sharply among European as among American companies, and similar company characteristics like size, profitability, and firm age increase both the propensity to pay dividends and the amount of dividends paid. Asset growth rate, leverage and being headquartered in a civil law country reduce dividend amounts and propensities to pay, but we find neither systematic dividend catering effects in Europe nor conclusive evidence of continent-wide convergence in dividend policy.

Keywords: Payout policy, economic integration, international financial markets, corporation and securities law

JEL Classification: G35, F15, G15, K22

Suggested Citation

von Eije, J. Henk and Megginson, William L., Dividend Policy in the European Union (December 2006). Available at SSRN: https://ssrn.com/abstract=900749 or http://dx.doi.org/10.2139/ssrn.900749

J. Henk Von Eije

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen

William L. Megginson (Contact Author)

University of Oklahoma ( email )

307 W Brooks, 205A Adams Hall
Norman, OK 73019
United States
(405) 325-2058 (Phone)
(405) 325-1957 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/M/William.L.Megginson-

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