Lee, King Fuei (2010): Demographics, dividend clienteles and the dividend premium. Forthcoming in: Quarterly Review of Economics and Finance , Vol. 4, No. 51 (November 2011): pp. 368-375.
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The catering theory of dividends proposed that corporate dividend policy is driven by prevailing investor demand for dividend payers, and that managers cater to investors by paying dividends when the dividend premium is high. While earlier research found that the dividend premium is not driven by traditional clienteles derived from market imperfections such as taxes, transaction costs, or institutional investment constraints, we find empirical evidence that demographic clienteles are an important source of the time-varying demand for dividend payers. In particular, we find that, as consistent with the behavioural life-cycle theory and the marginal opinion theory of stock price, the dividend premium is positively driven by demographic clientele variation represented by changes in the proportion of the older population. Our results are robust when controlled for the factors of investor sentiment, signalling, agency costs and time trend.
|Item Type:||MPRA Paper|
|Original Title:||Demographics, dividend clienteles and the dividend premium|
|Keywords:||Dividend policy; demographics; dividend premium; dividend clienteles|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G35 - Payout Policy
G - Financial Economics > G0 - General > G00 - General
|Depositing User:||King Fuei Lee|
|Date Deposited:||06. Nov 2011 05:00|
|Last Modified:||14. Feb 2013 10:36|
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