Evidence on Irish financial analysts' and fund managers' views about dividends

Abstract

PurposeThis paper aims to identify the views of Dublin‐based financial analysts and major Irish fund managers on dividends.Design/methodology/approachThe paper uses semi‐structured interviews with 16 participants and analyses their responses concerning the role of dividends in the share screening process; the perceived relationship between dividend payment policy and share values; the impact of taxation and attitudes to share buybacks.FindingsThe results support the notion that dividends are an important in investor decision‐making processes and that dividends influence share valuations. Another key finding is that fund managers appear to be able to influence the dividend policy of Irish companies in which they have a shareholding. Finally, taxation issues appear relatively unimportant and the majority of fund managers prefer cash dividends to buybacks.Originality/valueThe paper addresses the issue of dividend policy from a qualitative standpoint, rather than the conventional large‐sample aggregate form of analysis. Moreover, whilst most other studies have investigated the issue from the corporate point of view, this investigation focuses on analysts' and fund managers' views.