Abstract

http://ssrn.com/abstract=1320565
 
 

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Disappearing Dividends, Catering, and Risk


Gerard Hoberg


University of Maryland - Department of Finance

Nagpurnanand R. Prabhala


University of Maryland - Robert H. Smith School of Business

January 2009

The Review of Financial Studies, Vol. 22, Issue 1, pp. 79-116, 2009

Abstract:     
Fama and French () show that the propensity to pay dividends declines significantly between 1978 and 1999. We examine this “disappearing dividends” puzzle through the lens of risk and report two main findings: (i) Risk is a significant determinant of the propensity to pay dividends, and it explains roughly 40% of disappearing dividends; (ii) We find little support for the view that disappearing dividends reflects firms' catering to transient fads for dividends. Absent risk controls, proxies for fads matter, but these proxies are insignificant once we control for risk. Our results are robust to an extensive battery of robustness tests that vary samples, time periods, proxies for fads, the types of empirical tests, and the nature of payout decisions made by firms.

Keywords: G15, G30, G38

Accepted Paper Series


Not Available For Download

Date posted: January 3, 2009  

Suggested Citation

Hoberg, Gerard and Prabhala, Nagpurnanand R., Disappearing Dividends, Catering, and Risk (January 2009). The Review of Financial Studies, Vol. 22, Issue 1, pp. 79-116, 2009. Available at SSRN: http://ssrn.com/abstract=1320565 or http://dx.doi.org/hhn073

Contact Information

Gerard Hoberg (Contact Author)
University of Maryland - Department of Finance ( email )
Robert H. Smith School of Business
Van Munching Hall
College Park, MD 20742
United States
HOME PAGE: http://www.rhsmith.umd.edu/finance/faculty/hoberg.aspx
Nagpurnanand R. Prabhala
University of Maryland - Robert H. Smith School of Business ( email )
4427 Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2165 (Phone)
301-405-0359 (Fax)
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