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The behavioral foundations of corporate dividend policy a cross-country analysis

Author

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  • Breuer, Wolfgang
  • Rieger, M. Oliver
  • Soypak, K. Can

Abstract

We study a model that relates dividend payout policy to behavioral issues based on the ideas of mental accounting. A panel analysis across 29 countries and over 43,000 firm-years demonstrates that our model studying the relation between dividends and patience, loss aversion, and ambiguity aversion can be verified empirically. Our paper seems to be the first that highlights empirically in a straightforward way the relevance of behavioral patterns as important determinants for corporate dividend policy, while previous empirical studies could tackle this issue only indirectly. With several robustness tests we also address potential doubts concerning the quality of our data and analyze further implications of our theory.

Suggested Citation

  • Breuer, Wolfgang & Rieger, M. Oliver & Soypak, K. Can, 2014. "The behavioral foundations of corporate dividend policy a cross-country analysis," Journal of Banking & Finance, Elsevier, vol. 42(C), pages 247-265.
    • Handle: RePEc:eee:jbfina:v:42:y:2014:i:c:p:247-265
    DOI: 10.1016/j.jbankfin.2014.02.001
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    More about this item

    Keywords

    Ambiguity aversion; Behavioral decision theory; Corporate dividend policy; Loss aversion; Patience;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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