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Dividends and politics

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  • Bank, Steven
  • Cheffins, Brian
  • Goergen, Marc

Abstract

This paper contributes to a growing literature on politics and corporate governance by providing an empirical analysis of the impact of political factors on dividend payouts. The focus is on the determinants of dividend policy in U.K. public companies between 1949 and 2002. We augment Lintner's [Lintner, J., 1956. Distribution of incomes of corporations among dividends, retained earnings, and taxes. American Economic Review 46, 97-113.] partial adjustment model by including measures of politics and test the model using aggregate annual dividends and earnings data. We find neither the political placement of the party in power nor regulations explicitly designed to regulate corporate behaviour correlate in the direction political theories of corporate governance would predict.

Suggested Citation

  • Bank, Steven & Cheffins, Brian & Goergen, Marc, 2009. "Dividends and politics," European Journal of Political Economy, Elsevier, vol. 25(2), pages 208-224, June.
  • Handle: RePEc:eee:poleco:v:25:y:2009:i:2:p:208-224
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    References listed on IDEAS

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    9. Jean Crockett & Irwin Friend, "undated". "Dividend Policy in Perspective: Can Theory Explain Behavior? (Revision of 30-86)," Rodney L. White Center for Financial Research Working Papers 04-88, Wharton School Rodney L. White Center for Financial Research.
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    Cited by:

    1. repec:eee:jbfina:v:85:y:2017:i:c:p:113-131 is not listed on IDEAS
    2. P. Du Jardin & E. Séverin, 2011. "Dividend policy," Post-Print hal-00801923, HAL.
    3. Steven Bank & Brian Cheffins & Marc Goergen, 2007. "Does Dividend Policy Have a Political Dimension? The British Case," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(1), pages 33-37, 05.
    4. Felix Arnold, 2013. "German MPs' Outside Jobs and Their Repercussions on Parliamentary Effort," Discussion Papers of DIW Berlin 1340, DIW Berlin, German Institute for Economic Research.
    5. Renneboog, Luc & Trojanowski, Grzegorz, 2011. "Patterns in payout policy and payout channel choice," Journal of Banking & Finance, Elsevier, vol. 35(6), pages 1477-1490, June.

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