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

Santa Clara University, Leavey School of Business; Santa Clara University School of Law; University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Date Written: January 11, 2018

Abstract

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)

Santa Clara University, Leavey School of Business ( email )

Santa Clara, CA 95053
United States

Santa Clara University School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact ( email )

Berkeley, CA 94720
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,596
Abstract Views
7,863
Rank
18,518
PlumX Metrics