The long-run persistence in dividend policy

Leentje Moortgat (), Jan Annaert () and Marc Deloof ()
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Leentje Moortgat: Ghent University
Jan Annaert: University of Antwerp
Marc Deloof: University of Antwerp

Cliometrica, 2024, vol. 18, issue 3, No 1, 651 pages

Abstract: Abstract Dividend policy is not set de novo each year, but dividends are smoothed from one year to the next, leading to a short-term persistent component. In this paper, we investigate whether there is also long-run persistence in dividend policy, by using a unique sample of firms listed on the Brussels Stock Exchange since 1824. We show that dividend smoothing leads to a long-term persistent component in dividend policy, as we find evidence that the initial dividend policy, as measured in the first calendar year after listing, has a long-lasting effect on future dividend policy. Although this effect persists for many years, it fades away over time. When this happens, a new slowly changing dividend policy emerges.

Keywords: Dividend policy; Dividend smoothing; Financial history; Belgium (search for similar items in EconPapers)
JEL-codes: G35 N23 N24 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11698-023-00279-8

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