The Global Preference for Dividends in Declining Markets

35 Pages Posted: 26 Oct 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: November 2015

Abstract

Investors globally prefer dividend‐paying stocks over nondividend‐paying stocks more in declining than in advancing markets, even accounting for firm‐level growth opportunities, size and risk effects. Dividend‐paying stocks outperform nondividend‐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 underperformance 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: F3, G35

Suggested Citation

Goldstein, Michael A. and Goyal, Abhinav and Lucey, Brian M. and Muckley, Cal B., The Global Preference for Dividends in Declining Markets (November 2015). Financial Review, Vol. 50, Issue 4, pp. 575-609, 2015, Available at SSRN: https://ssrn.com/abstract=2679129 or http://dx.doi.org/10.1111/fire.12078

Michael A. Goldstein

Babson College - Finance Division ( email )

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

Abhinav Goyal (Contact Author)

University College Cork ( email )

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Brian M. Lucey

Trinity Business School, Trinity College Dublin ( email )

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University of Sydney Business School ( email )

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

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Vietnam

Jiangxi University of Finance and Economics ( email )

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China

Cal B. Muckley

University College Dublin ( email )

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Ireland
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