God Save the Queen and Her Dividends: Corporate Payouts in the United Kingdom
We examine whether the decline in the number of dividend payers is purely a U.S. phenomenon or is part of a global trend. Focusing on the United Kingdom, a capital market comparable in maturity and sophistication to that of the United States, we find that the number of U.K. firms paying dividends declines from 75.9% to 54.5%. After controlling for firm size and profitability, we find a declining propensity to pay dividends over the 1998–2002 subperiod. We conclude that a shift in catering incentives appears most likely explain these recent changes in U.K. payout policies.