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Dividend payments as a response to peer influence

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  • Grennan, Jillian

Abstract

I show dividend policies have peer effects. My estimates indicate that firms speed up the time taken to make a dividend change by about 1.5 quarters and increase payments by 16% in response to peer changes. The peer effects matter in increases but not decreases. In contrast to dividends, repurchases show no peer effects. In addition, announcement returns indicate that investors partially anticipate the consequences of peer effects. Overall, peer interdependencies account for 12% of total dividend payments.

Suggested Citation

  • Grennan, Jillian, 2019. "Dividend payments as a response to peer influence," Journal of Financial Economics, Elsevier, vol. 131(3), pages 549-570.
    • Handle: RePEc:eee:jfinec:v:131:y:2019:i:3:p:549-570
    DOI: 10.1016/j.jfineco.2018.01.012
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    More about this item

    Keywords

    Dividends; Payout; Repurchases; Peer effects; Announcement returns;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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