The Long-Run Persistence of Dividend Policy

45 Pages Posted: 7 Jul 2020 Last revised: 22 Jun 2023

See all articles by Leentje Moortgat

Leentje Moortgat

Ghent University; University of Antwerp

Jan Annaert

University of Antwerp

Marc Deloof

University of Antwerp; University of Antwerp - Antwerp Management School

Date Written: May 25, 2020

Abstract

Dividend policy is not set de novo each year, but dividends are smoothed from one year to the next, leading to a short-term persistent component. In this paper, we investigate whether there is also long-run persistence in dividend policy, by using a unique sample of firms listed on the Brussels Stock Exchange since 1824. We show that dividend smoothing leads to a long-term persistent component in dividend policy, as we find evidence that the initial dividend policy, as measured in the first calendar year after listing, has a long-lasting effect on future dividend policy. Although this effect persists for many years, it fades away over time. When this happens, a new slowly changing dividend policy emerges.

Keywords: Dividend policy, Dividend smoothing, Imprinting, Financial history, Belgium

JEL Classification: G35, N23, N24

Suggested Citation

Moortgat, Leentje and Annaert, Jan and Deloof, Marc, The Long-Run Persistence of Dividend Policy (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3610350 or http://dx.doi.org/10.2139/ssrn.3610350

Leentje Moortgat (Contact Author)

Ghent University ( email )

Sint Pietersplein 7
Ghent, 9000
Belgium

University of Antwerp ( email )

Prinsstraat 13
Antwerp, 2000
Belgium

Jan Annaert

University of Antwerp ( email )

Prinsstraat 13
Antwerp, 2000
Belgium

Marc Deloof

University of Antwerp ( email )

Prinsstraat 13
Faculteit TEW
Antwerpen, 2000
Belgium
+32 3 265 41 69 (Phone)
+32 3 265 47 99 (Fax)

HOME PAGE: http://https://www.uantwerpen.be/en/staff/marc-deloof/

University of Antwerp - Antwerp Management School ( email )

Boogkeers 5
Antwerp, 2000
Belgium

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