EconPapers    
Economics at your fingertips  
 

Why Individual Investors Want Dividends

Ming Dong, Chris Robinson and Chris Veld ()
Additional contact information
Chris Robinson: York University - Atkinson School of Administrative Studies

Finance from University Library of Munich, Germany

Abstract: The question of why individual investors want dividends is investigated by submitting a questionnaire to a Dutch investor panel. The respondents indicate that they want dividends partly because the cost of cashing in dividends is lower than the cost of selling shares. Their answers provide strong confirmation for the signaling theories of Bhattacharya (1979) and Miller and Rock (1985). They are inconsistent with the uncertainty resolution theory of Gordon (1961, 1962) and the agency theories of Jensen (1986) and Easterbrook (1984). The behavioral finance theory of Shefrin and Statman (1984) is not confirmed for cash dividends but is confirmed for stock dividends. Finally, our results indicate that individual investors do not tend to consume a large part of their dividends. This raises some doubt as to whether a reduction or elimination of dividend taxes will stimulate the economy.

Keywords: Dividends; individual investors; survey (search for similar items in EconPapers)
JEL-codes: G30 G35 G38 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2004-12-04
New Economics Papers: this item is included in nep-acc and nep-fin
Note: Type of Document - pdf; pages: 53
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/fin/papers/0412/0412009.pdf (application/pdf)

Related works:
Journal Article: Why individual investors want dividends (2005) Downloads
Working Paper: Why Individual Investors want Dividends (2003) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0412009

Access Statistics for this paper

More papers in Finance from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

 
Page updated 2021-04-13
Handle: RePEc:wpa:wuwpfi:0412009