The catering theory of dividends on the US stock markets
Journal Title: Zarządzanie i Finanse - Year 2013, Vol 11, Issue 2
Abstract
Fama and French [Fama, French, 2001] document that the proportion of dividend-paying firms has been declining in the United States since 1960s. Baker and Wurgler [Baker, Wurgler, 2004a, 2004b, 2012] suggest that these appearing and disappearing dividends are an out-come of firms catering to transient fads for dividend paying stocks. We revisit the problem and add to the discussion in several ways. Firstly, we exclude from our sample small market capitalization and low-profitability companies. We argue that those small companies have limited capacity to run a dividend policy targeted at catering temporal preferences of investors, and at the same time they are highly sensitive to other valuation factors. Secondly, we assume that managers of non-paying firms need a full year to observe and to react to misevaluation of dividend payers, and to initiate dividend payments in their own firms. Thirdly, we investigate if the number of dividend payers is significantly greater in periods when the market performance was particularly disappointing. After excluding the small capitalization and low profitability firms, we confirm in our sample that the proportion of dividend-payers has been declining over the years. Parallel, we document general tendency of decreasing dividend premium. We attribute the short-term volatility in dividend premium to changes in investor sentiment. We show that managers tend to cater to those changes, however with a delay. We find statistically significant positive correlation between the value of dividend premium in a given year and the proportion of dividend-payers in the next year. We find no preferences of investors for the dividend paying companies in years of poor market performance.
Authors and Affiliations
Przemysław Konieczka, Adam Szyszka
Keywords
Related Articles
- EP ID EP136688
- DOI -
- Views 78
- Downloads 0
Territorial Diversification of Unemployment in Poland as An Element of Company Management
The major purpose of the paper is to perform space and time analysis of condition and structure of unemployment in Poland in voivodeship-based ap-proach. Changes over time in fundamental rates that characterise dis...
Najlepsze praktyki w zarządzaniu zasobami ludzkimi według badań Instytutu CRF
Celem artykułu jest prezentacja najlepszych praktyk ostatnich lat, w obszarze zarządzania zasobami ludzkimi. W opracowaniu zwrócono uwagę na praktyki zaobserwowane przez Instytut CRF. Według badań tej organizacji są to:...
Taksonomia niepewności
Niepewność w zarządzaniu przedsiębiorstwem jest bezpośrednio związana z brakiem możliwości skutecznego antycypowania zmian warunków jego funkcjonowania na rynku. Warunki te nie zawsze są dostatecznie rozpoznane przez dec...
Marketing wirusowy w promocji miejsc i produktów turystycznych
Celem niniejszego artykułu jest zdefiniowanie pojęcia marketingu wirusowego, przedstawienie jego założeń, przykładów i zalet oraz siły przekazu. Opisano zasady tworzenia przekazu, wskazując przykłady kampanii...
Phases of investing fund liquidation process – de lege lata & de lege ferenda
The dissertation presents a procedure of investing fund liquidation process under the Polish laws – The Act on Investment Funds, Journal of Laws No 146, item 1546 with further amendments and The Ordinance of the Council...