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Participation rates of dividend reinvestment plans: Differences between utility and nonutility firms

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  • Janet M. Todd
  • Dale L. Domian

Abstract

This paper examines survey data to study features of dividend reinvestment plans and their relationship to participation rates. Differences between utility and nonutility firms are examined. Discount features and new issue shares are found to be used more often by the utility group, while both groups allow cash contributions along with the dividend reinvestment. Discount features and high returns are correlated with higher participation rates. There is also some preliminary evidence that participation rates by large blockholders may increase trading volume.

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  • Janet M. Todd & Dale L. Domian, 1997. "Participation rates of dividend reinvestment plans: Differences between utility and nonutility firms," Review of Financial Economics, John Wiley & Sons, vol. 6(2), pages 121-135.
    • Handle: RePEc:wly:revfec:v:6:y:1997:i:2:p:121-135
    DOI: 10.1016/S1058-3300(97)90001-X
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    References listed on IDEAS

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    1. Peterson, Pamela P & Peterson, David R & Moore, Norman H, 1987. "The Adoption of New-Issue Dividend Reinvestment Plans and Shareholder Wealth," The Financial Review, Eastern Finance Association, vol. 22(2), pages 221-232, May.
    2. Finnerty, John D., 1989. "New issue dividend reinvestment plans and the cost of equity capital," Journal of Business Research, Elsevier, vol. 18(2), pages 127-139, March.
    3. Mikkelson, Wayne H. & Partch, M. Megan, 1986. "Valuation effects of security offerings and the issuance process," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 31-60.
    4. Chang, Oh & Nichols, Dr, 1992. "Tax Incentives And Capital Structures - The Case Of The Dividend Reinvestment Plan," Journal of Accounting Research, Wiley Blackwell, vol. 30(1), pages 109-125.
    5. Richardson, Gordon & Sefcik, Stephan E. & Thompson, Rex, 1986. "A test of dividend irrelevance using volume reactions to a change in dividend policy," Journal of Financial Economics, Elsevier, vol. 17(2), pages 313-333, December.
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