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Peer Effects on Firm Dividend Policies in Taiwan

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  • Lee, King Fuei

Abstract

With the dividend-paying culture increasingly taking hold in corporate Taiwan, this paper investigates the effects of industry peers on the corporate dividend policies in the country. By employing the instrument variable technique, we find strong evidence that the payout policies of Taiwanese firms are positively influenced by the policies of their industry peers. This peer influence tends to be stronger for companies operating in industries with lower product competition and higher information uncertainty, indicating that firms imitate the dividend policies of their peers for information-based reasons. Younger, smaller and harder-to-value companies are also more likely to mimic their larger, older and easier-to-value peers. Our findings are robust to alternative definitions of control variables, instrument variable and industry classifications.

Suggested Citation

  • Lee, King Fuei, 2018. "Peer Effects on Firm Dividend Policies in Taiwan," MPRA Paper 103102, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:103102
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    File URL: https://mpra.ub.uni-muenchen.de/103102/1/MPRA_paper_103102.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Dividend policy; Peers effect; Taiwan;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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