Takeover risk and dividend strategy: A study of UK firms

Dickerson, Andrew and Gibson, Heather D. and Tsakalotos, Euclid (1998) Takeover risk and dividend strategy: A study of UK firms. Journal of Industrial Economics, 46 (3). pp. 281-300. ISSN 0022-1821. (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1111/1467-6451.00072

Abstract

We investigate the relationship between a company's dividend strategy and its risk of takeover, Our results from a large panel of UK quoted companies suggest that higher dividend payments are associated with a significantly lower conditional probability (hazard) of takeover. Moreover, firms which wish to avoid takeover would be better to distribute the marginal pound 1 of earnings in dividends rather than investing it in the company. We consider two explanations for these findings. We suggest that the presence of an active market for corporate control could encourage firms to raise dividends to maintain shareholder loyalty.

Item Type: Article
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: R.F. Xu
Date Deposited: 01 May 2009 16:29
Last Modified: 16 Jun 2014 13:11
Resource URI: http://kar.kent.ac.uk/id/eprint/17695 (The current URI for this page, for reference purposes)
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