|
Malcolm Baker, Jeffrey Wurgler
NBER Working Paper No. 9542*
Issued in March 2003
NBER Program(s): CF
---- Abstract -----
We develop a theory in which the decision to pay dividends is driven by investor demand. Managers cater to investors by paying dividends when investors put a stock price premium on payers and not paying when investors prefer nonpayers. To test this prediction, we construct four time series measures of the investor demand for dividend payers. By each measure, nonpayers initiate dividends when demand for payers is high. By some measures, payers omit dividends when demand is low. Further analysis confirms that the results are better explained by the catering theory than other theories of dividends.
*Published: Baker, Malcolm and Jeffrey Wurgler. "A Catering Theory Of Dividends," Journal of Finance, 2004, v59(3,Jun), 1125-1165.
Would you like an annual subscription to NBER Working Papers? Click
here for more information.
You may purchase this paper on-line in .pdf format
from SSRN.com ($5) for electronic delivery.
Information for subscribers and others expecting no-cost downloads
Machine-readable bibliographic record -
MARC,
RIS,
BibTeX
| 
