Publication
Title
Intra-industry conformity in dividend policy
Author
Abstract
Purpose The purpose of this paper is to study the impact of intra-industry conformity tendencies on dividend policy among a large sample of US firms. Design/methodology/approach The paper explores mimetic influences on dividend policy. Consistent with prior institutional research, the paper measures mimetic pressures as institutional prevalence or the pervasiveness of a feature of dividend policy within a firm's relevant environment. Findings The results reveal a significantly positive relationship between the lagged density of firms in the industry that pay a dividend and the probability of a focal firm paying a dividend. Moreover, for firms paying a dividend, results indicate that higher similarity in dividend payout among firms in the same industry induces more conformity between a focal firm and average industry practice. Overall, results are consistent with imitation in dividend policy. Research limitations/implications The results support the view that future research on dividend policy should value social and behavioral factors more explicitly in order to arrive at a more overall and consistent explanation of firms' dividend policy. Moreover, the results also illustrate the relevance of alternative theories in explaining dividend policy. Practical implications The results show that intra-industry benchmarking of dividend policy plays a significant role in the USA. Originality/value This study documents the relevance of social imitation mechanisms behind dividend payout behavior and therefore adds to the current knowledge of the impact of behavioral processes on dividend policy.
Language
English
Source (journal)
MANAGERIAL FINANCE
Publication
2011
ISSN
0307-4358
Volume/pages
37:3(2011), p. 492-516
Full text (publishers version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
VABB-SHW
Record
Identification
Creation 01.07.2011
Last edited 11.12.2015
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