In December of 1998, energy firm British Petroleum acquired American-based Amoco and became BP-Amoco. BP’s stock was listed on the London Stock Exchange and also traded on U.S markets through an American depositary receipt (ADR). Before the merger, Amoco’s dividend policy for the previous four years had been to increase dividends by $0.025 every year, but maintain a quarterly dividend within each year. For its part, for the previous two years, BP had increased dividends by £0.0125 semiannually. As a result of the merger, BP fixed dividend increases in dollar terms. For several years thereafter, BP increased its dividends at the rate Amoco had followed, $0.025 each year, but maintained the common policy in the United Kingdom of making semiannual payments. Based on the material in the chapter, discuss BP’s decision to adopt Amoco’s recent policy for dividend growth. In addition, analyze how investors in the United States might regard dividend policies associated with ADRs, where dividend policy is established in terms of a foreign currency subject to foreign exchange volatility, but which nevertheless pays U.S. investors in dollar amounts.