Local Culture and Dividends

Local Culture and Dividends

I empirically investigate whether geographical variations in local culture, as proxied by local religion, affect dividend demand and corporate dividend policy for a large sample of US firms. Firms located in Protestant counties are more likely to be dividend payers, initiate dividends, and have high...

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Bibliographic Details
Published in:Financial management Vol. 45; no. 1; pp. 105 - 140
Main Author: Ucar, Erdem
Format: Journal Article
Language:English
Published: Tampa Blackwell Publishing Ltd 01-03-2016
Wiley Blackwell
Financial Management Association
Subjects:
Age groups
Business entities
Catholicism
Civilization
Corporate headquarters
Culture
Dividend distributions
Dividends
Environmental aspects
Investors
Protestantism
Religion
Religious identity
Social aspects
Stock dividends
United States
Yield
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Summary:I empirically investigate whether geographical variations in local culture, as proxied by local religion, affect dividend demand and corporate dividend policy for a large sample of US firms. Firms located in Protestant counties are more likely to be dividend payers, initiate dividends, and have higher dividend yields, while firms located in Catholic counties are less likely to be dividend payers and have lower dividend yields. There is a geographically varying dividend clientele effect consistent with the variations in risk aversion among different cultural groups. My results suggest that firms largely held by local investors determine their corporate policies in line with local culture.
Bibliography:ArticleID:FIMA12118
ark:/67375/WNG-4RK2H53V-M
istex:346711D5D0A6FF46BC0909D3C5BF88F156D07B93
Erdem Ucar is an Assistant Professor of Finance in the Barowsky School of Business at the Dominican, University of California in San Rafael, CA
I would like to thank an anonymous referee, Raghavendra Rau (Editor), Christos Pantzalis, M. Sinan Goktan, Ayca Altintig, Aslihan G. Korkmaz, and seminar participants at the Financial Management Association 2013 Annual Meeting and the Southern Finance Association 2013 Annual Meeting for their helpful comments. Any remaining errors are mine
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ISSN:0046-3892
1755-053X
DOI:10.1111/fima.12118