The dividends in the UK companies have been on the rise, despite uncertain economic outlook due to COVID-19, pension deficits and irrespective of whether the companies have been making profits. This column analyses the reasons for such a dramatic increase in dividend payouts. We attribute it to pressure from investors in three fundamental ways: the threat of takeovers, shareholder value-oriented corporate governance practices measured by director independence and board equity incentives, and short-term trading and institutional ownership patterns
