The Global Preference for Dividends in Declining Markets

Financial Review, 2015, Forthcoming

43 Pages Posted: 10 Nov 2014 Last revised: 1 Sep 2015

See all articles by Michael A. Goldstein

Michael A. Goldstein

Babson College - Finance Division

Abhinav Goyal

University College Cork

Brian M. Lucey

Trinity Business School, Trinity College Dublin; University of Sydney Business School; Ho Chi Minh City University of Economics and Finance; Jiangxi University of Finance and Economics

Cal B. Muckley

University College Dublin

Multiple version iconThere are 2 versions of this paper

Date Written: June 8, 2014

Abstract

Investors globally prefer dividend-paying stocks over non-dividend-paying stocks more in declining than in advancing markets, even accounting for firm-level growth opportunities, size and risk effects. Dividend paying stocks outperform non-dividend paying stocks, from 0.63% (China) to 3.79% (Canada) more per-month in declining than in advancing markets. In declining markets, dividend paying firms outperform by more than any under-performance in advancing markets. The results are robust across dividend taxation regimes, legal environments, emerging and developed markets, periods prior to and after the 2008 global financial crisis, the exclusion of the dividend declaration month and in respect to segmented or integrated international capital markets.

Keywords: Dividend policy, market movement, G-7, BRICS

JEL Classification: G35, F3

Suggested Citation

Goldstein, Michael A. and Goyal, Abhinav and Lucey, Brian M. and Muckley, Cal B., The Global Preference for Dividends in Declining Markets (June 8, 2014). Financial Review, 2015, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2520913 or http://dx.doi.org/10.2139/ssrn.2520913

Michael A. Goldstein

Babson College - Finance Division ( email )

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HOME PAGE: http://faculty.babson.edu/goldstein/

Abhinav Goyal

University College Cork ( email )

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Cork
Ireland
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Brian M. Lucey (Contact Author)

Trinity Business School, Trinity College Dublin ( email )

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University of Sydney Business School ( email )

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Australia

Ho Chi Minh City University of Economics and Finance ( email )

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Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Jiangxi University of Finance and Economics ( email )

South Lushan Road
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China

Cal B. Muckley

University College Dublin ( email )

Blackrock, Co. Dublin
Ireland
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