Industry Influence on Dividend Policy in a Firm-Specific Model
12 Pages Posted: 19 May 2006
Date Written: September 1982
Industry classification is known to be related to the dividend payouts of firms. This occurs because industry variables proxy for underlying factors (such as investment opportunities) that affect firms' payout policies and vary systematically across industries. Hence, a well-specified dividend payout model at the firm level should pre-empt any role for industry effects. This paper shows that industry effects can be reduced nearly to zero by employing a set of firm-specific variables to explain dividend payouts across firms.
Keywords: Dividend policy, payout, industry influence
JEL Classification: G35
Suggested Citation: Suggested Citation