Retail Clientele and Dividend Policy

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 (Unpublished)

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Abstract

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.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Thirumalai, R S
http://orcid.org/0000-0001-9251-6829
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Dividend policy, Retail clientele, Trader behavior, Stock splits
Subjects: Finance
Depositing User: Ilayaraja M
Date Deposited: 21 Jun 2019 19:39
Last Modified: 21 Jun 2019 19:44
URI: http://eprints.exchange.isb.edu/id/eprint/1156
Publisher URL: http://dx.doi.org/10.2139/ssrn.2398494
Publisher OA policy: http://sherpa.ac.uk/romeo/issn/0378-4266/
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