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Dividends versus Share Repurchases Evidence from Canada: 1985-2003


  • Maher Kooli
  • Jean-François L'Her


This paper provides out-of-sample evidence on the payout policy in Canada during the 1985-2003 period. First, we show that the proportion of nonfinancial firms paying dividends has decreased, while the proportion initiating repurchase programs has increased. We also show that Canadian firms paying dividends and repurchasing shares are extremely concentrated. Second, we focus on the factors that could affect the choice between repurchases and dividends. We find that dividends and repurchases are used by different types of firms. While we do not confirm the financial flexibility hypothesis, our results are consistent with the substitution hypothesis after controlling for selection bias and endogeneity. Copyright (c) 2010, The Eastern Finance Association.

Suggested Citation

  • Maher Kooli & Jean-François L'Her, 2010. "Dividends versus Share Repurchases Evidence from Canada: 1985-2003," The Financial Review, Eastern Finance Association, vol. 45(1), pages 57-81, February.
  • Handle: RePEc:bla:finrev:v:45:y:2010:i:1:p:57-81

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    Cited by:

    1. Andriosopoulos, Dimitris & Hoque, Hafiz, 2013. "The determinants of share repurchases in Europe," International Review of Financial Analysis, Elsevier, vol. 27(C), pages 65-76.
    2. Geiler, P.H.M. & Renneboog, L.D.R., 2014. "Executive Remuneration and the Payout Decision," Discussion Paper 2014-032, Tilburg University, Center for Economic Research.

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