Payout Policy of European Companies

Abstract

Despite Europe’s global importance, very little published research has examined payout policy on this continent. The rather scarce research which has been conducted in this field throughout European companies cover different countries, groups of companies and timeframes, which makes it very difficult to perform comparisons and formulate proper conclusions. The aim of this work is to analyze the payout policy of European companies with comparison to companies outside the European market. Research on the literature has been performed as well as own analyses. The most important tendencies of the European companies’ payout policy have been formulated. Companies in Europe have higher propensity to pay dividends than their counterparts outside Europe and increasing, yet still variable, payout values, both dividends and share repurchases. European companies transfer a substantially bigger part of their net profit to their shareholders than their counterparts from the other continents. An increment in the dividend payout ratio in Europe is clearly visible over the last couple of years. High dividend yields of European companies compensate low yields of governments and corporate bonds.