Vanishing Stock Dividends

50 Pages Posted: 27 Jan 2016 Last revised: 6 Jul 2021

See all articles by Avner Kalay

Avner Kalay

Tel Aviv University - Faculty of Management; University of Utah - David Eccles School of Business

Feng Zhang

Southern Methodist University (SMU) - Finance Department

Date Written: July 4, 2021

Abstract

We document a striking drop in the fraction of U.S. firms paying stock dividends (from 15% in the 1950s to 0.2% in the 2010s). Only one firm still pays stock dividends in 2020. About 50% of payers stop paying them every year, but merely 0.09% of non-payers start paying them in the 2010s, compared to 7.2% in the 1950s. We locate two economic forces behind vanishing stock dividends. First, changing firm characteristics reduce firms’ supply of stock dividends. Second, the growing influence of institutional investors lowers investors’ demand for stock dividends, which are costly to stockholders of levered firms.

Keywords: stock dividends, investor learning, signaling

JEL Classification: G35

Suggested Citation

Kalay, Avner and Zhang, Feng, Vanishing Stock Dividends (July 4, 2021). Available at SSRN: https://ssrn.com/abstract=2722115 or http://dx.doi.org/10.2139/ssrn.2722115

Avner Kalay

Tel Aviv University - Faculty of Management ( email )

P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel
972 3 6406298 (Phone)
972 3 6406330 (Fax)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
801-581-5457 (Phone)

Feng Zhang (Contact Author)

Southern Methodist University (SMU) - Finance Department ( email )

SMU Cox School of Business
6212 Bishop Blvd
Dallas, TX 75275
United States

HOME PAGE: http://https://sites.google.com/view/fengzhangfin

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
274
Abstract Views
1,631
Rank
202,986
PlumX Metrics