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|title: ||Lower propensity to pay dividends? new evidence from Europe|
|authors: ||Vieira, Elisabete F. Simões|
Raposo, Clara C.
|keywords: ||Cash Dividends, Dividend Payments|
|issue date: ||2007|
|abstract: ||Recently, some empirical studies reported the phenomenon of the low propensity of
firms to dividend payment, concluding that companies have become less likely to pay
dividends. In addition, the major parts of these studies sustain the investors’
expectations regarding dividend payments also decreased.
We analyse the propensity to pay dividends in three European markets: Portugal, France
and the UK. Although they are all European markets, they are different from each other
for several reasons. Firstly, the UK is one of the most important European capital
markets, whereas the French and Portuguese markets are smaller, specially Portugal,
that is a very small market compared to other Western European markets. Additionally,
these two markets are less intensively researched. Secondly, we have differences in
these countries associated with the ownership of equity. In Portugal and France
ownership tends to be more concentrated than in the UK. Thirdly, Portugal and France
are bank-based system, whereas the UK is a market-based system. Finally, the legal
rules covering protection of corporate shareholders is different in the three countries.
While the UK is a country of Anglo-Saxon influence, the other two countries are
characterised by a continental influence.
We find evidence of the decline of firms paying dividends, except for the French
market. Moreover, we find evidence suggesting that the Portuguese market does not
have such a smoothing dividend policy like the US or the UK markets, but it has a more
volatile dividend policy, such as the case of the German market.|
|appears in collections||ISCA - Working paper|
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