Consuming Dividends

52 Pages Posted: 28 Oct 2019

See all articles by Konstantin Bräuer

Konstantin Bräuer

Goethe University Frankfurt

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration; Goethe University Frankfurt - Research Center SAFE

Tobin Hanspal

WU Vienna University of Economics and Business

Date Written: October 9, 2019

Abstract

This paper studies why investors buy dividend-paying assets and how they time their consumption accordingly to anticipated income. We combine administrative bank data linking customers' categorized consumption transactions and income to detailed portfolio and trading data and survey responses on financial behavior. We find that private consumption is excessively sensitive to dividend income. Investors across wealth, income and age distributions increase spending precisely around dividend receipt. Importantly, we find that consumption responses are driven by financially sophisticated investors who select dividend portfolios, anticipate dividend income, and plan consumption accordingly. Our results contribute to the literature on a dividend clientele and provide evidence of 'planned' excess sensitivity.

Keywords: Consumption, Stock market wealth, Dividends, Excess sensitivity, Self-control, Household finance, Retail investors

JEL Classification: G50, G40, G11, G15, D12, D14, D15

Suggested Citation

Bräuer, Konstantin and Hackethal, Andreas and Hanspal, Tobin, Consuming Dividends (October 9, 2019). Available at SSRN: https://ssrn.com/abstract=3466731 or http://dx.doi.org/10.2139/ssrn.3466731

Konstantin Bräuer

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Theodor-W.-Adorno Platz 3
Frankfurt am Main, 60323
Germany

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Tobin Hanspal (Contact Author)

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1 1
Wien, 1020
Austria

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