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The Dividend Policy of the Portuguese Corporations Evidence from Euronext Lisbon

2004; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.609461

1556-5068

José Benzinho,

Firm Innovation and Growth

Dividend policy behaviour of corporations is significantly different from country for country. Although dividend policy has attracted a great deal of research, it is not satisfactory explained why corporations distribute a portion of their earnings as dividends or why investors pay attention to dividends. The research and theory on the dividend puzzle (Black, 1976) have also been influenced by the empirical observations of the market corporate and investor attitude towards the dividend policy. Lintner (1956) observes that corporations trading in developed capital markets follow stable dividend policies and pay out a substantial part of their earnings as dividends. The focus of this study is to study how the corporations that trade in the Lisbon Stock Exchange (Euronext Lisbon), a small European stock market, set their dividend policies in a different institutional environment and research empirically whether the Euronext Lisbon corporations follow stable cash dividend policies as in developed markets where dividend smoothing is a management tendency. For testing dividend stability and institutional effects we use the dividend policy model of Lintner (1956). The data are from Euronext Lisbon and excluded financial institutions, since these corporations are governed by different regulations in regard to their dividend policies. The sample is an unbalanced panel data.