A Global Investigation of Dividend Yields: Shareholder Demand, Agency Problems, and Market Quality

31 Pages Posted: 19 Sep 2011 Last revised: 28 Jan 2012

See all articles by Pawan Jain

Pawan Jain

University of Wyoming - College of Business - Department of Economics and Finance

Quentin C Chu

University of Memphis - Finance

Date Written: September 16, 2011

Abstract

We compare cross-sectional variation of dividend yields of companies across 32 countries. Beyond the impact of firm-specific accounting and financial variables, this study investigates how the variations in country level variables affect dividend payout policies. The country level variables include shareholder demand due to demographic variations and consumption needs, agency problems manifested in the extent of minority shareholder protection and business disclosures, and market quality in terms of transparency and liquidity. We find that dividend yields are higher when diverse shareholder demands are strong, extents of business disclosures and legal protections are weak, and the market qualities are poor. The empirical evidence supports the demand-based theory in a global setting and the essence of bird-in-the-hand theory - the more the uncertainty the stronger the preference for dividend payout.

Keywords: dividends, investor demand, market quality, agency cost

JEL Classification: G35, G30

Suggested Citation

Jain, Pawan and Chu, Quentin C, A Global Investigation of Dividend Yields: Shareholder Demand, Agency Problems, and Market Quality (September 16, 2011). Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1929183 or http://dx.doi.org/10.2139/ssrn.1929183

Pawan Jain (Contact Author)

University of Wyoming - College of Business - Department of Economics and Finance ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States

Quentin C Chu

University of Memphis - Finance ( email )

United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
240
Abstract Views
1,120
rank
132,551
PlumX Metrics