Educating Investors about Dividends

83 Pages Posted: 15 May 2024

See all articles by Andreas Hackethal

Andreas Hackethal

Goethe University Frankfurt

Tobin Hanspal

WU Vienna University of Economics and Business; Vienna Graduate School of Finance (VGSF)

Samuel M. Hartzmark

Boston College - Carroll School of Management

Konstantin Bräuer

Goethe University Frankfurt

Date Written: May 14, 2024

Abstract

We educate investors with significant dividend holdings about the benefits of dividend reinvestment and the costs of misperceiving dividends as additional, free income. The intervention increases planned dividend reinvestment in survey responses. Using trading records, we observe a corresponding causal increase in dividend reinvestment in the field of roughly 50 cents for every euro received. This holds relative to their prior behavior and a placebo sample. Investors who learned the most from the intervention update their trading by the largest extent. The results suggest the free dividends fallacy is a significant source of dividend demand. Our study demonstrates that simple, targeted, and focused educational interventions can affect investment behavior.

Keywords: Investor education, dividends, free dividend fallacy, educational intervention

JEL Classification: G11, G02, D10

Suggested Citation

Hackethal, Andreas and Hanspal, Tobin and Hartzmark, Samuel M. and Bräuer, Konstantin, Educating Investors about Dividends (May 14, 2024). SAFE Working Paper No. 420, Available at SSRN: https://ssrn.com/abstract=4827769 or http://dx.doi.org/10.2139/ssrn.4827769

Andreas Hackethal

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Tobin Hanspal

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1 1
Wien, 1020
Austria

Vienna Graduate School of Finance (VGSF) ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Samuel M. Hartzmark (Contact Author)

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Konstantin Bräuer

Goethe University Frankfurt ( email )

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
151
Abstract Views
515
Rank
365,145
PlumX Metrics