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Title: Where does the money for rising dividend payments come from? : a market data analysis of listed Swiss corporations and their rising dividend payments since the turn of the millennium
Authors : Mattli, Sandro
Advisors / Reviewers : Affolter, Beat
Extent : 46
Publisher / Ed. Institution : ZHAW Zürcher Hochschule für Angewandte Wissenschaften
Publisher / Ed. Institution: Winterthur
Issue Date: 2019
License (according to publishing contract) : CC BY-NC-ND 4.0: Attribution - Non commercial - No derivatives 4.0 International
Language : English
Subject (DDC) : 332.6: Investment
Abstract: Most companies at one point in their life will have to face decisions regarding their payout strategy. Thus, dividends are a widely discussed instrument of shareholder compensation in the business world. It is often observed that firms are reluctant to reduce dividend payments, even if this forces them to raise debt, reduce cash or forgo investing activities. Market data shows that the amount of total regular dividends paid to shareholders of listed Swiss firms has increased almost every year since 2003, while at the same time the income only had a significant increase before the financial crisis in 2008, but then stagnated until 2017. Hence, the question arises how dividends can continue to grow if the operational performance shows signs of weakness. Or put differently, how are growing amounts of dividends being financed. Therefore, this thesis set out to answer the question from where the cash for the continuously rising dividend payments comes from. This study tried to detect where the money for the continuously rising dividend payments derives from based on a quantitative analysis of Swiss stock market data retrieved from Bloomberg. The relevant data consisted of figures from the balance sheet, the income and cash flow statements of 99 Swiss corporations listed between the year 2000 and 2017. To support the findings, scientific literature was consulted. The results show that the sample of companies examined mainly lowers investing activities from 2010 to 2017 in order to free up cash for dividend payments. The data does not imply systematic increases or decreases in other positions that could have led to cash flows available for disbursements. However, share repurchases are a flexible Instrument occasionally used by managers to steer cash flows. So, after the financial crisis, Swiss corporations did make a little less repurchases than before the crisis, which again led to more cash available for regular dividend payments.
Departement: School of Management and Law
Publication type: Bachelor thesis
DOI : 10.21256/zhaw-18960
Appears in Collections:BSc Betriebsökonomie

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