Dividend Policies in an Unregulated Market: The London Stock Exchange 1895-1905

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Dividend Policies in an Unregulated Market: The London Stock Exchange 1895-1905

Author Info

Braggion, F.
Moore, L. (Tilburg University, Center for Economic Research)

Additional information is available for the following registered author(s):

Fabio Braggion

Abstract

We examine the e¤ects of dividend policies on 469 British firms between 1895 and 1905. These firms operated in an environment of very low taxation and an absence of institutional constraints. We find strong support for asymmetric information/signaling theories of dividend policy, and little support for agency models. Our results suggest that dividends can signal information from managers to shareholders, even if dividend payments incur only very low taxes. However, taxes appear to be necessary to allow dividend policies to resolve agency problems between managers and investors.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2008-83.

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Date of creation: 2008
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Handle: RePEc:dgr:kubcen:200883

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Find related papers by JEL classification:
N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-01-31 (All new papers)
NEP-CTA-2009-01-31 (Contract Theory & Applications)

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