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Corporate payouts in Australia

Author

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  • Cheema, Muhammad A.
  • Chiah, Mardy
  • Zhong, Angel

Abstract

Kahle and Stulz (2021) find that inflation-adjusted corporate payouts (dividends and repurchases) in the US are three times larger over the period 2000–2019 (post-2000) compared to the 1971–1999 period (pre-2000), and that the growth in the payouts comes from repurchases instead of dividends. We investigate the corporate payouts in Australian equity markets with a dividend imputation system and find that the payouts increase by almost 80% from the pre-2000s to the 2000s. Unlike in the US, the payout increase is largely driven by dividends instead of share repurchases in Australia. Similar to the US, Australian top payers have also become bigger, older, more profitable, and have more free cash flow in the 2000s than before. Moreover, top Australian payers pay out more of their free cash flow, since they spend less on capital expenditures.

Suggested Citation

  • Cheema, Muhammad A. & Chiah, Mardy & Zhong, Angel, 2023. "Corporate payouts in Australia," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:pacfin:v:79:y:2023:i:c:s0927538x23000562
    DOI: 10.1016/j.pacfin.2023.101990
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    References listed on IDEAS

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    1. Eugene F. Fama & Kenneth R. French, 2001. "Disappearing Dividends: Changing Firm Characteristics Or Lower Propensity To Pay?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(1), pages 67-79, March.
    2. DeAngelo, Harry & DeAngelo, Linda & Skinner, Douglas J, 1992. "Dividends and Losses," Journal of Finance, American Finance Association, vol. 47(5), pages 1837-1863, December.
    3. Chung Tran & Sebastian Wende, 2022. "Dividend Imputation, Investment and Capital Accumulation in Open Economies," ANU Working Papers in Economics and Econometrics 2022-687, Australian National University, College of Business and Economics, School of Economics.
    4. Kathleen M. Kahle & René M. Stulz, 2017. "Is the US Public Corporation in Trouble?," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 67-88, Summer.
    5. Kahle, Kathleen & Stulz, René M., 2021. "Why are corporate payouts so high in the 2000s?," Journal of Financial Economics, Elsevier, vol. 142(3), pages 1359-1380.
    6. Mardy Chiah & Daniel Chai & Angel Zhong & Song Li, 2016. "A Better Model? An Empirical Investigation of the Fama–French Five-factor Model in Australia," International Review of Finance, International Review of Finance Ltd., vol. 16(4), pages 595-638, December.
    7. Michelle Bergmann, 2016. "The Rise in Dividend Payments," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 47-56, March.
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    More about this item

    Keywords

    Dividends; Australian stock market; Firm characteristics; Profitability; Stock returns;
    All these keywords.

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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