Dividend Payments as a Response to Peer Influence
49 Pages Posted: 4 Nov 2012 Last revised: 11 Jan 2018
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: Suggested Citation