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The long-run persistence in dividend policy

Author

Listed:
  • Leentje Moortgat

    (Ghent University
    University of Antwerp)

  • Jan Annaert

    (University of Antwerp
    Antwerp Management School)

  • Marc Deloof

    (University of Antwerp
    Antwerp Management School)

Abstract

Dividend policy is not set de novo each year, but dividends are smoothed from one year to the next, leading to a short-term persistent component. In this paper, we investigate whether there is also long-run persistence in dividend policy, by using a unique sample of firms listed on the Brussels Stock Exchange since 1824. We show that dividend smoothing leads to a long-term persistent component in dividend policy, as we find evidence that the initial dividend policy, as measured in the first calendar year after listing, has a long-lasting effect on future dividend policy. Although this effect persists for many years, it fades away over time. When this happens, a new slowly changing dividend policy emerges.

Suggested Citation

  • Leentje Moortgat & Jan Annaert & Marc Deloof, 2024. "The long-run persistence in dividend policy," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 18(3), pages 621-651, September.
    • Handle: RePEc:spr:cliomt:v:18:y:2024:i:3:d:10.1007_s11698-023-00279-8
    DOI: 10.1007/s11698-023-00279-8
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    More about this item

    Keywords

    Dividend policy; Dividend smoothing; Financial history; Belgium;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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