When do German firms change their dividends?

Abstract

Dividends of German firms are often perceived to be more flexible than those of Anglo-American firms. We analyse the decision to change the dividend for 221 German firms over 1984-1993. Consistent with Lintner [Am. Econ. Rev. 46 (1956 97], net earnings are key determinants of dividend changes. However, our findings also refine those of Lintner [Am. Econ. Rev. 46 (1956) 97] and Miller and Modigliani [J. Bus. 34 (1961) 411]. First, the occurrence of a loss is a key determinant of dividends in addition to the traditional key determinant, the level of net earnings. Second, the majority of dividend cuts or omissions are temporary. This stands in marked contrast with DeAngelo et al. [J. Finance 47 (1992) 1837] who report that US firms are more likely to reduce their dividend when earnings deteriorate on a permanent basis. Finally, we find that firms with a bank as their major shareholder are more willing to omit their dividend than firms controlled by other shareholders. D

Tax reform and payout policy: Do shareholder clienteles or payout policy adjust?

“…For example, Goergen et al (2005) note that German conservative accounting practice may make cash flows a more meaningful determinant of dividend payouts than published earnings. Indeed, Andres et al (2009) report findings from Germany that are consistent with that notion.…”

Taxation, Dividends, and Share Repurchases: Taking Evidence Global

“… See Korkeamaki, Liljeblom, and Pasternack (2010),Pattenden and Twite (2008),Ang, Blackwell, and Megginson (1991),Bell and Jenkinson (2002),Christoffersen, Géczy, Musto, and Reed (2005),Goergen, Renneboog, and Correia da Silva (2005),Alstadsaeter and Fjaerli (2009), Dewenter andWarther (1998), andLee, Liu, Roll, and Subrahmanyam (2006).…”

Corporate Governance: A Critical Survey of Key Concepts, Issues, and Recent Reforms in the US

“…In addition, there has been quite a bit of evidence that German firms benefit from a more flexible dividend policy that their US or UK counterparts. (see Georgen et al (2003)). It is also worth noting that in Germany bank debt plays an important role for financially distressed firms.…”