Appearing and Disappearing Dividends: The Link to Catering Incentives
26 Pages Posted: 11 Nov 2008
There are 6 versions of this paper
Appearing and Disappearing Dividends: The Link to Catering Incentives
Why are Dividends Disappearing? An Empirical Analysis
Why are Dividends Disappearing? An Empirical Analysis
Appearing and Disappearing Dividends: The Link to Catering Incentives
Appearing and Disappearing Dividends: The Link to Catering Incentives
Appearing and Disappearing Dividends: The Link to Catering Incentives
Date Written: July 2003
Abstract
We 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 ends in the propensity to pay dividends between 1963 and 2000. Second, we show that each of these ends 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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