British Airways shareholders have endured more than four years of share-price turbulence. The airline's stock has followed a bumpy path from 450p in early 2001 down to 100p two years ago, before climbing back to 266p (€3.85) last week.

Retail investors and financial institutions usually cushion such volatility with dividend payments, but BA investors have received no payments since 2000. Last year, the airline had more than £1 billion of balance-sheet reserves from which it could pay dividends, but chose instead to pay down debt and return to sustainable profitability.

This week, however, the dividend pot was wiped out. Confirming what had been mooted for some months, BA said recognising its £1.4 billion pension fund deficit on the balance sheet to meet international financial reporting (IFRS) standards would push its distributable dividend reserves down to minus £100 million. As a result, it no longer has the legal right to pay a dividend, even though it has profits and cash.

The move, which compounds the misery of BA's cash-starved shareholders, is a salutary warning to other investors. IFRS requirements mean that scores of British companies' dividend reserves could be eroded by pension deficits and other accounting items.

Vanessa Knapp, a partner at law firm Freshfields Bruckhaus Deringer, warns that executives are waking up to the issue slowly. "The fact that a high-profile company like BA has this problem will make more companies and investors worry," she says.

The threat is not market-wide, but its extent is difficult to gauge because the impact of the new rules depend on financial details often hidden from public view. What is clear is that the dividend implications of IFRS have the potential to hit investors hard.

Many large companies have told investors how last year's earnings would have looked under IFRS - sometimes better, sometimes worse, while others have responded to IFRS, issuing fewer stock options or using new hedging techniques. That matters little to most investors, but the possibility of a diminished dividend stream is far more tangible.

"Dividends are a key part of retail investor strategies, particularly for people who are close to retirement or who need that steady income stream," says Angus Rigby, chief operating officer of broker TD Waterhouse.

Some 40 per cent of investors on the TD Waterhouse website search for stocks with high-dividend yields. Whether those yields will be affected by IFRS will depend on accounting policies, corporate structures, and how deeply companies have thought about the knock-on effects of the new standards.

Peter Elwin, head of accounting and valuation research at Cazenove, says it comes down to a "toxic combination" of accounting and company law. The problem arises from a law designed to protect creditors, which dictates that companies can only pay dividends if they have positive distributable reserves. The law worked fine under UK accounting standards.

But the legal definition of distributable reserves is out of kilter with IFRS because it cannot handle "non-cash" items introduced by the new standards - assets and liabilities that exist on paper but have not yet been realised or paid off.

The most significant new arrivals are pension deficits, which also scuppered AEA Technology, a rail and environmental consultancy that halted dividend payments in March. It had distributable reserves of negative £33 million, before IFRS. Now it must absorb a £120 million deficit, but unlike BA, it will spread the impact over several years.

Other potential negatives include stock options, which must now be treated as an expense; dips in the value of financial instruments such as derivatives, and impairment charges for assets that lost value, such as the multibillion pound write-downs of 3G mobile phone licences.

But companies are pointing out that a cut in their dividend pot does not mean they have less cash and is not a signal of deteriorating business performance. BA's operating profit for the year to March actually rose 3 per cent to £556 million under IFRS.

Still, an unexpected cut in dividend payments would hit share prices and investor confidence.

Lawyers say one escape route is to convert some paid-up shareholders' capital - the original funds provided by investors - into retained earnings. Another is to take advantage of the fact that IFRS are mandatory for consolidated group accounts but not for the individual entity accounts from which dividends are actually paid. That gives companies the latitude to move unrealised losses into accounting enclaves where they do not cause trouble, which is what Rolls Royce did.

The aerospace group created a new parent company to pay dividends two years ago, which was separated from the trading companies where its £1 billion pensions deficit lay. Those trading companies now pay their earnings into the parent dividend pot.

Such restructurings can require bondholders' and the courts' approval says Ms Knapp, which is "an added uncertainty".

She says UK and European Union company law needs to be rewritten. One proposal is to replace the legal definition of distributable reserves with a solvency test, which would test a company's ability to pay dividends based on its cash position.

Such reform could take years, and with some dividend payments due later this year, companies must fend for themselves. Investors expecting the comfort of a cash infusion should seek assurances it is still coming.