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Dividend collectors and negative cash dividends: evidence from Istanbul Stock Exchange


  • Berna Kirkulak


This paper examines the dividend-collecting firms and negative dividend payers listed on Istanbul Stock Exchange (ISE) from 1991 through 2006. Turkey used to be a unique country in terms of 50% mandatory cash dividend payment application, and this policy pushed some firms to create other ways to overcome liquidity problems. Among the dividend-paying firms, some dividend payers collected the distributed dividends back through rights issues. In some cases, the amount of rights issues exceeded the distributed dividends. Hence, this resulted in negative dividend payments. This paper provides a solid empirical basis to examine dividend-collecting firms and negative dividends. The findings of this paper show that dividend collectors, in particular negative-dividend-paying firms, started to decrease after the suspension of mandatory cash dividend payment policy in 1995. The results suggest that large firms with low earnings are likely to become negative dividend payers. Further, firms with high investment potential and higher short-term debt constraints tend to collect more dividends back.

Suggested Citation

  • Berna Kirkulak, 2010. "Dividend collectors and negative cash dividends: evidence from Istanbul Stock Exchange," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 2(2), pages 89-106.
  • Handle: RePEc:ids:afasfa:v:2:y:2010:i:2:p:89-106

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