Market Participation and Dividend Clienteles
March 18, 2013
AFA 2009 San Francisco Meetings Paper
Asset allocation and market participation are intimately related investment decisions. Studies of dividend clienteles attribute the positive relation between age and dividends partially to lack of self-control, but consumers with self-control problems are precisely those less likely to hold securities. Using data from the Consumer Expenditure Survey (CEX), I model market participation and dividend preferences jointly and find evidence of self-selection bias in traditional regressions linking dividend preferences to investors' demographics. Moreover, the positive relation between dividends and age is more likely due to life-cycle considerations rather than to lack of self-control.
Number of Pages in PDF File: 28
Keywords: market participation, dividend clienteles, self-control, CEX
JEL Classification: G10, G19
Date posted: March 25, 2008 ; Last revised: March 20, 2013