Article | Journal of Finance | April 2011

Local Dividend Clienteles


We exploit demographic variation to identify the effect of dividend demand on corporate payout policy. Retail investors tend to hold local stocks, and older investors prefer dividend-paying stocks. Together, these tendencies generate geographically varying demand for dividends. Firms headquartered in areas where seniors constitute a large fraction of the population are more likely to pay dividends, initiate dividends, and have higher dividend yields. We also provide indirect evidence as to why managers may respond to the demand for dividends from local seniors. Overall, these results are consistent with the notion that the investor base affects corporate policy choices.

Keywords: Business Headquarters; Demographics; Investment; Geographic Location; Policy; Business and Shareholder Relations;


Becker, Bo, Zoran Ivkovic, and Scott Weisbenner. "Local Dividend Clienteles." Journal of Finance 66, no. 2 (April 2011): 655–684.