Active Catering to Dividend Clienteles: Evidence from Takeovers

57 Pages Posted: 9 Aug 2018 Last revised: 29 Dec 2019

See all articles by Andrey Golubov

Andrey Golubov

University of Toronto - Rotman School of Management

Meziane Lasfer

Cass Business School, City, University of London

Valeriya Vitkova

City University London - Sir John Cass Business School

Date Written: August 15, 2019

Abstract

We use merger-induced changes to shareholder structure to test for active catering to dividend clienteles. Following mergers, acquirers adjust their dividend payout toward that of the target, but only when they inherit target shareholders through stock swaps. This adjustment is stronger when legacy shareholders are more influential and reveal a greater preference for dividends through portfolio holdings and trading behavior. Country-level differences in dividend taxes, governance quality, and population age further shape the extent of adjustment in ways consistent with dividend preferences. Pre-closing, differences in dividend payout discourage the use of stock as a payment method.

Keywords: Dividend Policy, Mergers and Acquisitions, Clientele Effect

JEL Classification: G34, G35

Suggested Citation

Golubov, Andrey and Lasfer, Meziane and Vitkova, Valeriya, Active Catering to Dividend Clienteles: Evidence from Takeovers (August 15, 2019). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=3219350 or http://dx.doi.org/10.2139/ssrn.3219350

Andrey Golubov (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Meziane Lasfer

Cass Business School, City, University of London ( email )

106 Bunhill Row
London, EC1Y 8TZ
Great Britain
+44 20 7040 8634 (Phone)
+44 20 7040 8881 (Fax)

HOME PAGE: http://www.cass.city.ac.uk/faculty/m.a.lasfer/

Valeriya Vitkova

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

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