Retail Clientele and Dividend Policy

Murphy, D and Thirumalai, R S (2016) Retail Clientele and Dividend Policy. Working Paper. SSRN.

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Firms change their dividend policy following changes in their retail trading clientele. Using stock splits as an instrument, we find that a stock split leads to a 5.5 percentage point increase in the proportion of retail trading volume, which subsequently leads to a 0.10 percentage point decrease in the dividend yield and a 1.9 percentage point increase in annualized return volatility. The increase in retail trading clientele following a stock split is partially explained by the arrival of new retail investors with a preference for low-priced shares. Financial market activity has an impact on the real decisions of the firm.

Item Type: Monograph (Working Paper)
Subjects: Finance
Date Deposited: 21 Jun 2019 19:39
Last Modified: 21 Jun 2019 19:44

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