Companies which pay share dividends are more likely to invest in research and development according to a National Association of Pension Funds (NAPF) sponsored study.

The association believes that the survey provides powerful evidence to counter claims that UK companies sacrifice research investment in favour of excessive dividend payments.

The survey was conducted by Dr Ameziane Lasfer and Professor Rich-ard Taffler of the City University Business School, and examined the an-nual accounts of all UK listed companies between 1989 to 1996. It also showed that R&D expenditure of dividend paying companies is higher than that of non dividend paying companies. Dr Lasfer said: The payment of dividends and investment in R&D are not mutually exclusive but inter-dependent. Companies pay dividends to signal to the market their underlying performance and their prospects, and they invest in R&D to maintain their market position.""