Corporate Dividend Policies: Lessons from Private Firms

50 Pages Posted: 1 Sep 2006 Last revised: 13 Dec 2011

See all articles by Michael R. Roberts

Michael R. Roberts

The Wharton School - University of Pennsylvania; National Bureau of Economic Research (NBER)

Roni Michaely

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute

Date Written: August 8, 2011

Abstract

We compare the dividend policies of publicly- and privately-held firms in order to help identify the forces shaping corporate dividends, and shed light on the behavior of privately-held companies. We show that private firms smooth dividends significantly less than their public counterparts, suggesting that the scrutiny of public capital markets plays a central role in the propensity of firms to smooth dividends over time. Public firms pay relatively higher dividends that tend to be more sensitive to changes in investment opportunities than otherwise similar private firms. Ultimately, ownership structure and incentives play key roles in shaping dividend policies.

Keywords: Dividends, Payout Policy, Smoothing, Information Asymmetry, Agency Theory, Governance

JEL Classification: G35, G32, G15

Suggested Citation

Roberts, Michael R. and Michaely, Roni, Corporate Dividend Policies: Lessons from Private Firms (August 8, 2011). Available at SSRN: https://ssrn.com/abstract=927802 or http://dx.doi.org/10.2139/ssrn.927802

Michael R. Roberts (Contact Author)

The Wharton School - University of Pennsylvania; National Bureau of Economic Research (NBER) ( email )

3620 Locust Walk, #2320
Philadelphia, PA 19104-6365
United States
(215) 573-9780 (Phone)

HOME PAGE: http://finance.wharton.upenn.edu/~mrrobert/

Roni Michaely

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, 1211
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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