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 of Liverpool - Management School (ULMS)

Brian M. Lucey

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

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 )

320 Tomasso Hall
Babson Park, MA 02457-0310
United States
781-239-4402 (Phone)
781-239-5004 (Fax)

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

Abhinav Goyal (Contact Author)

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom
+44-151-795-2150 (Phone)

Brian M. Lucey

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

University of Economics Ho Chi Minh City ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Cal B. Muckley

University College Dublin ( email )

Blackrock, Co. Dublin
Ireland
+353-1-716-8091 (Phone)

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