International Dividend Repatriations

January 1, 2004

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Alexander Lehmann, and Ashoka Mody. International Dividend Repatriations, (USA: International Monetary Fund, 2004) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Income earned by the branches and subsidiaries of multinational firms can be either reinvested in the host country or repatriated as dividends to the firms' headquarters. Despite the rapid growth of foreign direct investment in the 1990s, there has been relatively limited analysis of the dividend behavior of multinationals. We find that investors in multinationals from the two largest foreign- investing countries-the United Kingdom and the United States-require a steady flow of dividends, consistent with a view that such regular dividend payments are a mechanism through which to discipline host-country managers. In contrast, German investors, who tend to invest in riskier countries, do not appear to demand persistent dividend payments. Changes in income also influence dividends. This payout ratio from income appears, for example, to be lower for less risky countries. Finally, the evidence suggests that dividend payments do not necessarily aggravate the balance of payments position during crises.

Subject: Balance of payments, Economic sectors, Foreign direct investment, Labor, National accounts, Personal income, Transnational corporations, Wages

Keywords: Africa, Decision act, Dividend flow, Dividend payment, Dividend payout specification, Dividend repatriation, Dividends, East Asia, Foreign direct investment, Multinational Companies, Personal income, Repatriation behavior, Repatriation ratio, Transnational corporations, Wages, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/005
Stock No:

WPIEA0052004
ISBN:

9781451842210
ISSN:

1018-5941

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