The Perception of Dividends by Managers: Do French CFOs Differ from their North-American Peers?

The purpose of this research is to study the perception of dividends by the CFOs of firms listed on the Euronext- Paris Stock Exchange and members of SBF 250 index. Using a mail questionnaire we survey the CFOs of a sample of 76 firms about their views on dividends. This survey was conducted with the support of the AMF. Our major goal is to compare our results with those of previous surveys conducted in Canada and in the U.S.A.

As regards the factors determining dividend policy decisions, surveyed CFOs grant the highest importance to the level of current and expected earnings, the desire to maintain a stable long term payout ratio, and to the pattern of past dividends. This result confirms Lintner’s observations (1956) as well as many other later studies conducted mostly in Anglo-Saxon countries. Our results provide support to two theories explaining why firms pay dividends: the life cycle and the signalling theories.

The overall perceptions of French managers on dividend policy and on the reasons why firms pay dividends are very similar to those of Canadian and U.S. managers. The fact that French companies have a more concentrated ownership than North Americans ones does not seem to impact managers’ perception. However some differences arise from our results: the views of our respondents on dividend issues are often more mixed than those of their American peers; and they grant less importance to the impact of dividend decisions on stock price. Further research would be needed to understand if these differences are due to educational differences between French and North American CFOs, or to cultural or legal differences between the surveyed countries.