Market Participation and Dividend Clienteles

28 Pages Posted: 25 Mar 2008 Last revised: 20 Mar 2013

Marco Rossi

Texas A&M

Date Written: March 18, 2013

Abstract

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.

Keywords: market participation, dividend clienteles, self-control, CEX

JEL Classification: G10, G19

Suggested Citation

Rossi, Marco, Market Participation and Dividend Clienteles (March 18, 2013). AFA 2009 San Francisco Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1107870 or http://dx.doi.org/10.2139/ssrn.1107870

Marco Rossi (Contact Author)

Texas A&M ( email )

360S Wehner
College Station, TX 77843-4218
United States

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