Seeking Safety in Bad Times: Dividends and Risk Perception

54 Pages Posted: 25 Feb 2009 Last revised: 12 Aug 2009

See all articles by Evgenia V. Golubeva

Evgenia V. Golubeva

University of Oklahoma - Division of Finance

Vahap Bülent Uysal

University of Oklahoma

Date Written: August 11, 2009


In this paper, we test whether varying investor desire for safety affects valuations and dividend payout policies in the time series. Specifically, we find that the market reactions to dividend initiations and dividend increases are higher, ceteris paribus, in times when investors are more likely to seek safety. In addition, dividend initiations and increases are higher and dividend-paying stocks have higher valuations relative to non-paying stocks during such times. Collectively, these findings suggest that investor desire for safety has an incremental and meaningful impact on valuations and payout policies.

Keywords: dividend policy, dividend initiation, consumer confidence, investor sentiment

JEL Classification: G10, G14, G35

Suggested Citation

Golubeva, Evgenia V. and Uysal, Vahap B., Seeking Safety in Bad Times: Dividends and Risk Perception (August 11, 2009). Available at SSRN: or

Evgenia V. Golubeva (Contact Author)

University of Oklahoma - Division of Finance ( email )

307 West Brooks
Room 205A, Adams Hall
Norman, OK 73019
United States
405-325-7727 (Phone)
405-325-7688 (Fax)

Vahap B. Uysal

University of Oklahoma ( email )

307 West Brooks
Norman, OK 73019-4004
United States
405-325 5672 (Phone)

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