Underwriting of Australian Dividend Reinvestment Plans

Abstract

This study examines the decision to underwrite dividend reinvestment plans (DRPs) by Australian listed firms over the sample period 1995–2013. We find that the decision to underwrite a DRP for non-financial firms is negatively related to the level of franking credits attached to dividends, but positively related to the leverage of the firm and the discount for new shares issued in lieu of dividends. Non-financial and financial firms that are larger in size are more likely to underwrite their DRP. Lastly, underwriting of DRPs decreased with the onset of and subsequent to the height of the global financial crisis.