Dividends in Europe

Abstract

In Europe, we find that larger and more profitable companies are more likely to pay dividends. The relationship between investment opportunities and the probability of paying dividends is not constant over the analysis period. However, looking at the average for the period, payers have more investment opportunities than non-payers. Those who have never paid dividends have the best investment opportunities, and former payers stand out for their low profitability and investment opportunities. The proportion of companies paying dividends fell from 78% in 1992 to 39% in 2010. It rose again to 50% in 2018, with a decrease in the period of the COVID 19 pandemic, reaching only 37% of companies paying dividends in 2020. After 2020, there was a recovery in that percentage. The increase in the percentage of companies paying dividends in the recovery period (from 2011 to 2022) was attributed to 85.11% of changes in company characteristics and the remaining 14.89% to an increase in the propensity to pay dividends. However, dividing the recovery period into two subgroups, before and after the year of the pandemic (2020), the change in the propensity to pay dividends plays a more significant role than the change in company characteristics in increasing the percentage of companies that pay dividends after 2010.

Date of Award	23 Jan 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Diana Bonfim (Supervisor)