IDEAS home Printed from https://ideas.repec.org/a/eme/ijmfpp/v9y2013i3p164-184.html
   My bibliography  Save this article

Canadian corporate payout policy

Author

Listed:
  • H. Kent Baker
  • Bin Chang
  • Shantanu Dutta
  • Samir Saadi

Abstract

Purpose - The purpose of this paper is to examine cash dividends and stock repurchases in Canada from 1988 to 2006 and their relationship with earnings. Design/methodology/approach - The study uses logistic regressions to examine the likelihood of paying dividends and the timing of repurchases and OLS regressions to examine the level of payout. Findings - The fraction of dividend-paying firms declines from 1988 to 2001 and then slightly rebounds until the end of the sample period in 2006. Firm size, profitability, investment opportunities, and catering incentives explain the likelihood of paying dividends. Unlike US firms, Canadian repurchase-only firms do not become important payers in terms of either the percentage of firms or the level of payout. Dividend-only firms pay out significant amounts of cash. Firms with both regular dividends and regular repurchases pay out the largest amount. The payout of different groups of payers is determined by their earnings. Testing firms with both regular dividends and regular repurchases reveals that earnings, undervaluation, and availability of cash explains the timing of repurchases but earnings mainly explains the level of repurchases. Research limitations/implications - Canadian data are unavailable after 2006, which precludes investigating the potential implications of the financial crisis beginning in 2007. Originality/value - This is the first paper to analyze the evolution of the relationship between payout and earnings in Canada.

Suggested Citation

  • H. Kent Baker & Bin Chang & Shantanu Dutta & Samir Saadi, 2013. "Canadian corporate payout policy," International Journal of Managerial Finance, Emerald Group Publishing, vol. 9(3), pages 164-184, June.
  • Handle: RePEc:eme:ijmfpp:v:9:y:2013:i:3:p:164-184
    as

    Download full text from publisher

    File URL: http://www.emeraldinsight.com/10.1108/IJMF-03-2012-0040?utm_campaign=RePEc&WT.mc_id=RePEc
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:finana:v:61:y:2019:i:c:p:255-273 is not listed on IDEAS
    2. Salvador Bertomeu & Antonio Estache, 2019. "Should Infrastructure Regulators regulate Dividends? Hints from a Literature Survey," Working Papers ECARES 2019-18, ULB -- Universite Libre de Bruxelles.
    3. repec:gam:jjrfmx:v:12:y:2019:i:3:p:110-:d:243128 is not listed on IDEAS

    More about this item

    Keywords

    Dividend policy; Stock repurchase; Canada; Dividends;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijmfpp:v:9:y:2013:i:3:p:164-184. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman). General contact details of provider: http://www.emeraldinsight.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.