Dividend changes and catering incentives

• 成果类型: Article
• 署名作者: Li, Wei; Lie, Erik
• 署名单位: University of Iowa
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2005.03.005
• 发表日期: 2006
• 页码: 293-308
• 关键词: dividends; payout policy; catering

摘要

We extend Baker and Wurgler's [2004a. Journal of Finance 59 1125-1165] catering theory to include decreases and increases in existing dividends. Consistent with our extended model, we find that the decision to change the dividend and the magnitude of the change depend on the premium that the capital market places on dividends. We also find that the stock market reaction to dividend changes depends on the dividend premium. Thus, the capital market rewards managers for considering investor demand for dividends when making decisions about the level of dividends. (c) 2005 Published by Elsevier B.V.