Interim dividend cuts and omissions in the UK

UK firms that cut or omit interim dividends during the period 1986–1993 are studied. Price reactions to cuts and omissions were found to be significantly negative and stronger for initial reductions. Future earnings variables were found to be predictable from interim dividend reductions. Gearing, company size and interim earnings change variables were found to have explanatory power for the decision to determine whether to cut or omit an interim dividend.