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Local Dividend Clienteles

  • Bo Becker
  • Zoran Ivković
  • Scott Weisbenner

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15175.

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Date of creation: Jul 2009
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Publication status: published as Bo Becker & Zoran Ivković & Scott Weisbenner, 2011. "Local Dividend Clienteles," Journal of Finance, American Finance Association, vol. 66(2), pages 655-683, 04.
Handle: RePEc:nbr:nberwo:15175
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