Peer Effects on Firm Dividend Policies in Taiwan

King Fuei Lee

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Dividend policy; Peers effect; Taiwan (search for similar items in EconPapers)
JEL-codes: G3 G35 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-cfn and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:103102

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