Comparisons of dividend per share behaviour of large UK and German companies over the period 1980-1995: preliminary findings

Following comments made in a House of Commons Trade and Industry Committee Report in 1994, this paper considers the dividend behaviour of 46 large UK and 44 large German quoted companies over the period 1980-1995. The analysis is principally based on comparison of the constancy, or otherwise, of dividends per share relative to profit before non-recurring items (PBNRI). Where possible, contingency tests have been applied to test the hypothesis that there is no difference between UK and German companies in their dividends per share response to identified changes in PBNRI. While interesting, statistically significant differences are found with respect to the basic situation of dividend behaviour linked to profit of the current or immediately preceding year, and the general, provisional, conclusion does not support the view that the two countries' dividend behaviour is that strikingly different. The relationship between dividends per share (DPS) and dividend cover was also examined with similar results. Differences in the two nations corporate dividend behaviour are subsequently discussed by reference to comparisons of tax and institutional shareholding characteristics.