Dividend Policy of German Firms

German firms pay out a lower proportion of their cash flows than UK and US firms.However, on a published profits basis, the pattern is reversed.Company law provisions and accounting policies account for these conflicting results.A partial adjustment model is used to estimate the implicit target payout ratio and the speed of adjustment of dividends towards a long run target payout ratio. We find that German firms do not base their dividend decisions on published earnings, but on cash flows.The reasons for the use of a cash flow-based payout policy are: (i) published earnings figures do not correctly reflect corporate performance as German firms tend to retain a significant part of their earnings to build up legal reserves, (ii) the conservative nature of German accounting policies, (iii) published earnings are subject to a higher degree of smoothing than cash flows.Regarding the speed of adjustment of dividends towards the long term target payout ratio, UK and US companies only slowly adjust their dividend policy whereas German are more willing to cut the dividend in the wake of a temporary decrease in profitability.This causes a higher degree of 'discreteness' in the dividends-pershare time series as opposed to the 'smoothness' (i.e., frequent annual small adjustments in the dividend per share) observed in the US and the UK.Dividend policy;payout policy;Lintner dividend model;dividend smoothing;partial adjustment model;corporate governance

When do German Firms Change their Dividends?

Anecdotal evidence suggests that the dividend policy of German firms is more flexible than the one of their Anglo-American counterparts.This paper analyses the decision to change the dividend for a panel of 221 German firms from 1984 to 1994.The choice of the period of study is motivated by the fact that at the start of this period there was an economic boom which was followed by a recession.Consistent with the traditional dividend literature, e.g.Lintner (1956), net earnings are key determinants of the decision to change the dividend.However, the study comes up with two findings which are contrary to Lintner (1956) and Miller and Modigliani (1961).First, the level of net earnings is not the only key determinant of the dividend decision, as the occurrence of a loss - whatever its magnitude - has an explanatory power exceeding the one of the level of the loss.Second, dividend cuts or omissions tend to be temporary and the majority of German firms quickly (within two years) revert to their initial dividend level.This stands in marked contrast with DeAngelo et al.(1992) who find that US firms are more likely to reduce their dividend when earnings deteriorate on a permanent basis.Furthermore, the fact that German firms frequently omit and cut their dividend and quickly return to their initial dividend suggests that dividends in Germany have less of a signalling role than dividends in the US and the UK.Our findings also contradict Bhattacharya's (1979) argument that the costs of dividend changes are asymmetric with dividend reductions being more costly to the firm than dividend increases.Finally, we find evidence that firms with banks as their major shareholder are more willing to omit their dividend than firms controlled by other types of shareholder.corporate control;dividend policy;corporate governance;corporate ownership

When do German Firms Change their Dividends?

Anecdotal evidence suggests that the dividend policy of German firms is more flexible than the one of their Anglo-American counterparts.This paper analyses the decision to change the dividend for a panel of 221 German firms from 1984 to 1994.The choice of the period of study is motivated by the fact that at the start of this period there was an economic boom which was followed by a recession.Consistent with the traditional dividend literature, e.g.Lintner (1956), net earnings are key determinants of the decision to change the dividend.However, the study comes up with two findings which are contrary to Lintner (1956) and Miller and Modigliani (1961).First, the level of net earnings is not the only key determinant of the dividend decision, as the occurrence of a loss - whatever its magnitude - has an explanatory power exceeding the one of the level of the loss.Second, dividend cuts or omissions tend to be temporary and the majority of German firms quickly (within two years) revert to their initial dividend level.This stands in marked contrast with DeAngelo et al.(1992) who find that US firms are more likely to reduce their dividend when earnings deteriorate on a permanent basis.Furthermore, the fact that German firms frequently omit and cut their dividend and quickly return to their initial dividend suggests that dividends in Germany have less of a signalling role than dividends in the US and the UK.Our findings also contradict Bhattacharya's (1979) argument that the costs of dividend changes are asymmetric with dividend reductions being more costly to the firm than dividend increases.Finally, we find evidence that firms with banks as their major shareholder are more willing to omit their dividend than firms controlled by other types of shareholder

Improving buildings refurbishment through operative conditions evaluation

As EU existing buildings stock account for 40% of the total energy consumption, it is important to take measures to reduce these needs and, consequently, reduce the EU external energy dependency as well as reducing the greenhouse gas emissions, in accordance with what is prescribed in the EU Directive 2002/91/EU on Energy Efficiency in Buildings (EPBD) and reinforced with the "EPBD-recast". The implementation of energy efficiency measures in the existing building stock is necessary to meet the 2020 targets. Thus, energy refurbishment of existing buildings is essential to achieve these goals. However, during the buildings refurbishment, energy issues should not be the only concerns since the indoor air quality is also as important. When planning a building refurbishment it is then necessary to take into account the energy efficiency exigencies and also the indoor air quality. To do so, the main problems of the existing buildings should be identified, in order to do the right choices regarding the refurbishment project. This work presents a study carried out in a large office building to identify the main pathologies, related to the energy efficiency and also to the indoor air quality. The study encompasses an “in-situ” evaluation of the operating conditions, indoor air quality and air change rate. The main objective of this study was to support the development of a refurbishment project of the building that can optimize the energy efficiency, but also the relevant parameters to the Indoor Air Quality. The results showed that the building has a poor envelope thermal resistance, inadequate shading systems and also several problems regarding high concentration of some pollutants like CO2 or VOC

Portuguese EPBD based regulation put side by side with energy simulation tools

In 2002 EU implemented the Energy Performance of Buildings Directive which led to the revision of the buildings thermal codes. The transposition of EBPD into the Portuguese legislation was made through three regulations: RCCTE for residential buildings, RSECE for office buildings and SCE that establishes the energy labelling system. The national code RCCTE sets two methodologies for assessing the energy performance of buildings: a simplified methodology and a more detailed one, depending if it is an existent or a new building. It has been observed that since the entrance into force of these codes, the project teams are using the RCCTE methodologies as tools to estimate the energy consumption of buildings. In this work it was tested the accuracy of this approach, performing two studies: one where the energy needs obtained with the RCCTE methodology were compared with the ones obtained with a dynamic simulation tool; and another where the same energy needs were compared with the ones obtained with a simplified RCCTE methodology foreseen for existing buildings. With the studies performed it was verified that the RCCTE methodology is accurate enough, except for the coldest regions, where another kind of tool should be applied. The simplified methodology showed inaccurate results and must be used with caution. However, with some corrections, important improvements can be achieved

Definition of the energy performance requirements in rehabilitation projects

Building rehabilitation is essential to achieve the targets defined by the EPBD-recast regarding energy efficiency, reduction of carbon emissions and use of on-site renewable energy sources. To propose an effective building rehabilitation it is necessary to study the best combination of available options in terms of construction solutions, technical building systems (hot water, ventilation, heating, cooling and lighting), their cost, but also their impact on the thermal and acoustic comfort and indoor air quality of the building. Also, the definition of the cost-optimal level is essential, which is the minimum lifecycle cost (including investment costs, maintenance and operating costs, energy costs, earnings from energy produced and disposal costs) of each individual measure. In this work the multi-criteria decision analysis method ELECTRE III will be applied to balance all these aspects, during the design phase of a refurbishment project, in order to assist the design team on the selection of construction solutions and technical building systems. A simple case study is presented to demonstrate the feasibility of this approach in what concerns the definition of the energy performance requirements (e.g. thickness of insulation and efficiency of the heating system/air-conditioning system etc.), of a rehabilitation project. In this example several retrofit alternatives were studied, their implementation could lead to the reduction of the energy needs of the building from 13% to 83%. With this approach it was also possible to identify the alternative with the best global performance considering the investment costs, energy needs, indoor air quality, thermal comfort, and CO2 emissions

An analysis of the potentialities of portuguese vernacular architecture to improve energy efficiency

Vernacular architecture is characterised by a type of formal expression that has been developed in response to a number of factors â climatic, lithologic, cultural and economic â characterising the local area or region. In its various forms, a range of techniques has been employed in different regions to mitigate the effects of climate. Despite the fact that Portugal is a small country, it has a territory full of contrasts, which gave origin to many different architectural manifestations. The approaches adopted in the design and construction of vernacular buildings have the potential for further development and could be adapted in response to contemporary needs. In the future, a blend of tradition and modernity should be aimed at in order to develop a new form of aesthetics and functional construction. Portuguese vernacular architecture is associated with a fund of valuable knowledge that should be studied and aligned with the principles of sustainability. In this paper, is presented the climatic contrast between the northern and southern parts of Portugal and the relation with the purpose of different passive solar techniques used in vernacular architecture to provide comfort. The focus is on the effectiveness of passive cooling techniques (e.g. high thermal inertia, the use of light colours and patios), and the findings of a case study in which the thermal performance during the summer of a vernacular residential building located in the south of Portugal are presented. In the context of the current global drive for clean energy and sustainable buildings, much can be learned from a review of past experience in order to provide an understanding of such forms of construction, which are an intrinsic feature of specific places and have evolved over time in the face of a lack of resources

Módulo inovador para a reabilitação energética

A reabilitação energética dos edifícios é uma área com crescente importância para o setor da construção Portuguesa. Tal deve-se a uma conjugação de diversos fatores, desde o estado de degradação e fraco desempenho energético dos mesmos, até à drástica redução do índice de construção nova. Como tal, de modo a adequar o parque habitacional existente às novas necessidades, mas também às mais recentes exigências por parte dos moradores, são fundamentais extensas intervenções de reabilitação no parque habitacional, procurando dotar o mesmo de uma maior eficiência energética, possibilitando assim garantir o conforto térmico dos ocupantes sem um gasto energético excessivo. No entanto, é necessário desenvolver novas soluções de reabilitação para introdução no mercado, as quais devem ser projetadas, não só para aumentar o desempenho térmico da envolvente mas também possuir maior viabilidade económica, serem fáceis de aplicar, garantirem menores tempos de aplicação, assegurarem um controlo de qualidade na sua execução e mostrarem algumas preocupações ambientais na seleção dos materiais. Com estes objetivos em perspetiva, o Laboratório de Física e Tecnologia das Construção da Universidade do Minho desenvolveu uma solução de reabilitação prefabricada para aplicação em fachadas de edifícios existentes otimizada em termos da relação custo / benefício