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Hard Times or Greatr Expectations?: Dividend Omissions and Dividend Cuts by UK Firms

  • Benito, Andrew

    (Bank of England)

  • Garry Young

This paper uncovers an increasing proportion of quoted UK companies omitting cash dividends. Using a large panel of quoted UK companies, we estimate models for the incidence of dividend omissions and cuts as functions of financial characteristics including cash flow, leverage, investment opportunities, investment and company size. These variables account for most of the increase in omission since 1995. There is relatively little evidence to link this to the major tax reform of 1997 that abolished tax refunds on dividend income payable to tax exempt institutions. Significant persistence effects indicate companies are slow to adjust their balance sheets through dividends.

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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 21.

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Date of creation: 29 Aug 2002
Date of revision:
Handle: RePEc:ecj:ac2002:21
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