Educating Investors about Dividends

Andreas Hackethal; Tobin Hanspal; Samuel M. Hartzmark; Konstantin Bräuer

doi:10.1093/rfs/hhaf074

Educating Investors about Dividends

Andreas Hackethal¹; Tobin Hanspal²; Samuel M. Hartzmark³; Konstantin Bräuer⁴

¹ Goethe University Frankfurt and Leibniz Institute SAFE , · ² WU Vienna University of Economics and Business and Vienna Graduate School of Finance , , · ³ Boston College Carroll School of Management and the NBER , · ⁴ Goethe University Frankfurt

Review of Financial Studies 2025

We educate investors about the benefits of dividend reinvestment and costs of misperceiving dividends as free income. The intervention increases planned dividend reinvestment in survey responses. Using trading records, we observe a causal increase in dividend reinvestment in the field of roughly 50 cents for every euro received. This holds relative to investors’ prior behavior and various control samples. Investors who learned the most from the intervention update their trading the most. The results suggest the free dividends fallacy is a significant source of dividend demand. Our study demonstrates that simple, targeted, and focused educational interventions can affect investment behavior.

DOI: 10.1093/rfs/hhaf074
Language: en
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Sources: crossref openalex