Dividend Payments as a Response to Peer Influence

49 Pages Posted: 4 Nov 2012 Last revised: 11 Jan 2018

See all articles by Jillian Grennan

Jillian Grennan

Duke University - Fuqua School of Business; Duke Innovation & Entrepreneurship Initiative

Date Written: January 11, 2018


I show that there are peer effects in dividend policies. My estimates indicate that firms speed up the time taken to make a dividend change by about 1.5 quarters and increase payments by 16% in response to peer changes. The peer effects matter in increases but not decreases. In contrast to dividends, repurchases show no peer effects. Additionally, announcement returns indicate that investors partially anticipate the consequences of peer effects. Overall, peer interdependencies account for 12% of total dividend payments.

Keywords: Dividends, Payout, Repurchases, Peer Effects, Announcement Returns

JEL Classification: C31, D22, G14, G35

Suggested Citation

Grennan, Jillian, Dividend Payments as a Response to Peer Influence (January 11, 2018). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2170561 or http://dx.doi.org/10.2139/ssrn.2170561

Jillian Grennan (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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