Local Dividend Clienteles

Bo Becker; Zoran Ivković; Scott Weisbenner

doi:10.1111/j.1540-6261.2010.01645.x

Journal of Finance Vol. 66 No. 2 2011

Local Dividend Clienteles

Bo Becker^{1,2,3,4,5,6,7,8,9}; Zoran Ivković; Scott Weisbenner^{1,2,3,4,5,6,7,8,9}

¹ University of Illinois Urbana-Champaign · ² City University of Hong Kong · ³ Nanyang Technological University · ⁴ Chinese University of Hong Kong · ⁵ Victoria University of Wellington · ⁶ Singapore Management University · ⁷ Temple University · ⁸ Michigan State University · ⁹ University of Hong Kong

Abstract

We exploit demographic variation to identify the effect of dividend demand on corporate payout policy. Retail investors tend to hold local stocks and older investors prefer dividend‐paying stocks. Together, these tendencies generate geographically varying demand for dividends. Firms headquartered in areas in which seniors constitute a large fraction of the population are more likely to pay dividends, initiate dividends, and have higher dividend yields. We also provide indirect evidence as to why managers may respond to the demand for dividends from local seniors. Overall, these results are consistent with the notion that the investor base affects corporate policy choices.

DOI: 10.1111/j.1540-6261.2010.01645.x
Volume: 66
Issue: 2
Pages: 655-683
Language: en
Sources: bibtex:phds-export.bib crossref openalex

Local Dividend Clienteles

Abstract

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