The Long-Run Persistence of Dividend Policy

59 Pages Posted: 7 Jul 2020

See all articles by Leentje Moortgat

Leentje Moortgat

University of Antwerp

Jan Annaert

University of Antwerp

Marc Deloof

University of Antwerp; University of Antwerp - Antwerp Management School

Date Written: May 25, 2020

Abstract

Dividend policy is not set de novo each year, but dividends are smoothed from one year to another. This smoothing leads to a short-term persistence in dividend policy. In this paper, we investigate the persistence of a dividend policy in the long run by using a unique sample of firms listed on the Brussels Stock Exchange (BSE) since 1824. The imprinting theory argues that firms develop certain persistent characteristics at important moments in their life cycle. Our investigation provides evidence that the initial dividend policy, measured at a firm’s first listing, has an effect on the future dividend policy. This effect persists for many years but decreases over the firm’s life cycle. However, a new stable slowly changing persistent component in dividend policy is formed.

Keywords: Dividend policy, Imprinting theory, Life-cycle considerations, Financial history, Belgium

JEL Classification: G35, N23, N24

Suggested Citation

Moortgat, Leentje and Annaert, Jan and Deloof, Marc, The Long-Run Persistence of Dividend Policy (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3610350 or http://dx.doi.org/10.2139/ssrn.3610350

Leentje Moortgat (Contact Author)

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

Jan Annaert

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

Marc Deloof

University of Antwerp ( email )

Prinsstraat 13
Faculteit TEW
Antwerpen, 2000
Belgium
+32 3 265 41 69 (Phone)
+32 3 265 47 99 (Fax)

HOME PAGE: http://https://www.uantwerpen.be/en/staff/marc-deloof/

University of Antwerp - Antwerp Management School ( email )

Boogkeers 5
Antwerp, 2000
Belgium

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