Appearing and disappearing dividends: The link to catering incentives
AbstractWe document a close link between fluctuations in the propensity to pay dividends and catering incentives. First, we use the methodology of Fama and French (2001) to identify a total of four distinct trends in the propensity to pay dividends between 1963 and 2000. Second, we show that each of these trends lines up with a corresponding fluctuation in catering incentives: The propensity to pay increases when a proxy for the stock market dividend premium is positive and decreases when it is negative. The lone disconnect is attributable to Nixon-era controls.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Financial Economics.
Volume (Year): 73 (2004)
Issue (Month): 2 (August)
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Web page: http://www.elsevier.com/locate/inca/505576
Other versions of this item:
- Malcolm Baker & Jeffrey Wurgler, 2003. "Appearing and Disappearing Dividends: The Link to Catering Incentives," NBER Working Papers 9995, National Bureau of Economic Research, Inc.
- G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
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