Original Research

The trend and composition of payout methods over a period of tax reform: Evidence from JSE-listed companies

Rudie Nel, Nicolene Wesson
Acta Commercii | Vol 21, No 1 | a882 | DOI: https://doi.org/10.4102/ac.v21i1.882 | © 2021 Rudie Nel, Nicolene Wesson | This work is licensed under CC Attribution 4.0
Submitted: 08 June 2020 | Published: 18 February 2021

About the author(s)

Rudie Nel, School of Accountancy, Faculty of Economic Management Sciences, Stellenbosch University, Stellenbosch, South Africa
Nicolene Wesson, Stellenbosch University Business School, Stellenbosch University, Stellenbosch, South Africa


Orientation: This study investigated the trend and composition of total payout distributed by companies listed on the Johannesburg Stock Exchange (JSE) over a period of tax reform.

Research purpose: The aim was to investigate whether the payout methods post-2012, after the introduction of dividends tax, differed from pre-2012.

Motivation for the study: Tax-related dividend literature predominantly explores the implications of differential taxes on dividends and of capital gains on dividends with a limited focus on total payout. The setting to investigate the total payout of JSE-listed companies is also unique as a result of South African tax reform.

Research design, approach and method: Descriptive statistics and a mixed-model analysis of variance were employed to describe the payout methods (dividends, capital distributions, additional shares and share repurchases) in rand value and frequency of election. The population comprised of 116 JSE-listed companies for the financial reporting periods 2006–2018.

Main findings: Ordinary dividends increased post-2012 whilst other payout, except for additional shares, decreased post-2012. An increase in scrip dividends (additional shares with a cash alternative) post-2012 confers flexibility to shareholders to manage their own financial needs, including tax considerations.

Practical/managerial implications: The policy implication is that the increasing use of ordinary dividends as a payout method could inform future government initiatives to generate revenue or provide tax incentives for saving.

Contribution/value-add: Submitted as the first article to investigate total payout of JSE-listed companies over a period of tax reform to provide evidence that payout policies adjusted based on the differential tax on dividends and capital gains.


dividends tax; capital gains tax; tax reform; payout method; dividend; capital distribution; additional shares; share repurchase


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Crossref Citations

1. The association between ownership concentration and payout behaviour: Evidence from South Africa
Rudie Nel, Nicolene Wesson, Lee-Ann Steenkamp
Acta Commercii  vol: 21  issue: 1  year: 2021  
doi: 10.4102/ac.v21i1.965