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Hard Times or Great Expectations? Dividend Omissions and Dividend Cuts by UK Firms

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Author Info
Andrew Benito
Garry Young

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Abstract

This paper uncovers an increasing proportion of quoted UK companies omitting cash dividends. Using a large panel of quoted UK firms, we estimate panel data probit models for the incidence of dividend omissions and cuts as functions of financial characteristics including cash flow, leverage, investment opportunities, investment and company size. These variables account for most of the increase in omission since 1995. There is relatively little evidence to link this to the major tax reform of 1997 that abolished tax refunds on dividend income payable to tax-exempt institutions. Significant persistence effects indicate companies are slow to adjust their balance sheets through their dividend. Copyright 2003 Blackwell Publishing Ltd.

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Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.

Volume (Year): 65 (2003)
Issue (Month): 5 (December)
Pages: 531-555
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Handle: RePEc:bla:obuest:v:65:y:2003:i:5:p:531-555

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  4. Miller, Merton H & Rock, Kevin, 1985. " Dividend Policy under Asymmetric Information," Journal of Finance, American Finance Association, vol. 40(4), pages 1031-51, September. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrew Benito, 2003. "The incidence and persistence of dividend omissions by Spanish firms," Banco de España Working Papers 0303, Banco de España. [Downloadable!]
  2. Philip Bunn & Garry Young, . "Corporate capital structure in the United Kingdom: determinants and adjustment," Bank of England working papers 226, Bank of England. [Downloadable!]
  3. Philip Bunn & Kamakshya Trivedi, . "Corporate expenditures and pension contributions: evidence from UK company accounts," Bank of England working papers 276, Bank of England. [Downloadable!]
  4. Andrew Benito & Garry Young, 2002. "Financial Pressure and Balance Sheet Adjustment by UK Firms," Banco de España Working Papers 0209, Banco de España. [Downloadable!]
    Other versions:
  5. Kamat, Manoj S., 2009. "The Ownership and Industry Effects of Corporate Dividend Policy in India, 1961-2007," MPRA Paper 12545, University Library of Munich, Germany. [Downloadable!]
  6. Andrew Benito, 2003. "The capital structure decisions of firms: is there a pecking order?," Banco de España Working Papers 0310, Banco de España. [Downloadable!]
  7. Andrew Benito & Ignacio Hernando, 2002. "Extricate: Financial Pressure and Firm Behaviour in Spain," Banco de España Working Papers 0227, Banco de España. [Downloadable!]
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