Do dividend clienteles exist? Evidence on dividend preferences of retail investors

Journal Article (Journal Article)

We study stock holdings and trading behavior of more than 60,000 households and find evidence consistent with dividend clienteles. Retail investor stock holdings indicate a preference for dividend yield that increases with age and decreases with income, consistent with age and tax clienteles, respectively. Trading patterns reinforce this evidence: Older, low-income investors disproportionally purchase stocks before the ex-dividend day. Furthermore, among small stocks, the ex-day price drop decreases with age and increases with income, consistent with clientele effects. Finally, consistent with the behavioral "attention" hypothesis, we document that older and low-income investors purchase stocks following dividend announcements.

Full Text

Duke Authors

Cited Authors

  • Graham, JR; Kumar, A

Published Date

  • June 1, 2006

Published In

Volume / Issue

  • 61 / 3

Start / End Page

  • 1305 - 1336

Electronic International Standard Serial Number (EISSN)

  • 1540-6261

International Standard Serial Number (ISSN)

  • 0022-1082

Digital Object Identifier (DOI)

  • 10.1111/j.1540-6261.2006.00873.x

Citation Source

  • Scopus