Yes, dividends are disappearing: worldwide evidence

Abstract

This study examines the patterns in payout policies worldwide. Utilizing data from a sample of more than 17,000 companies from 33 different countries, we find evidence in support of a significant worldwide decline in the propensity to pay dividends. Most of the decline is due to the payout policies of smaller and less profitable firms with comparatively more investment opportunities. We find that larger firms, those with higher profitability, and firms with low growth opportunities have a greater propensity to pay dividends. The proportion of dividend payers varies substantially across industries as well. However, the proportion of firms paying dividends has declined over time, even after firms’ characteristics have been controlled for. Moreover, aggregate dividends are highly concentrated in that they are paid only by a small group of firms. Our findings indicate that there has been a significant decline in the average dividend payout ratios over the years. The decline in the mean dividend payout ratios as well as the proportion of payers is much more pronounced in civil law countries.