Local Dividend Clienteles

摘要

We exploit variation in demographics to identify the effect of dividend demand on firm 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. Using a sample of U.S. listed firms, we show that, at locations at which seniors constitute a large fraction of the population, firms are more likely to pay and to initiate dividends, and have higher dividend yield. The fraction of seniors is not correlated with repurchases, profitability, or investment, however, suggesting that the geographic variation in dividend payout is not driven by some unmeasured firm characteristic affecting the ability or willingness to pay. Finally, ex-dividend day price drops are larger for firms in locations with many seniors, consistent with dividend demand being higher for those firms. We conclude that firm investor preferences help explain payout policy.