Do dividend clienteles exist? Evidence on dividend preferences of retail investors

John R. Graham, Alok Kumar

Research output: Contribution to journalArticle

152 Citations (Scopus)

Abstract

We study stock holdings and trading behavior of more than 60,000 households and find evidence consistent with dividend clienteles. Retail investor stock holdings indicate a preference for dividend yield that increases with age and decreases with income, consistent with age and tax clienteles, respectively. Trading patterns reinforce this evidence: Older, low-income investors disproportionally purchase stocks before the ex-dividend day. Furthermore, among small stocks, the ex-day price drop decreases with age and increases with income, consistent with clientele effects. Finally, consistent with the behavioral "attention" hypothesis, we document that older and low-income investors purchase stocks following dividend announcements.

Original languageEnglish (US)
Pages (from-to)1305-1336
Number of pages32
JournalJournal of Finance
Volume61
Issue number3
DOIs
StatePublished - Jun 2006
Externally publishedYes

Fingerprint

Dividends
Clientele
Investors
Retail
Purchase
Income
Low income
Tax clienteles
Dividend announcements
Household
Trading behavior
Dividend yield
Ex-dividend day

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Do dividend clienteles exist? Evidence on dividend preferences of retail investors. / Graham, John R.; Kumar, Alok.

In: Journal of Finance, Vol. 61, No. 3, 06.2006, p. 1305-1336.

Research output: Contribution to journalArticle

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