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Active catering to dividend clienteles: Evidence from takeovers

Lasfer, M. ORCID: 0000-0003-2338-672X, Golubov, A. & Vitkova, V. (2020). Active catering to dividend clienteles: Evidence from takeovers. Journal of Financial Economics, 137(3), pp. 815-836. doi: 10.1016/j.jfineco.2020.04.002


We use merger-induced changes to shareholder structure to test for active “catering” to dividend clienteles. Following mergers, acquirers adjust their dividend payout towards that of the target, but only when they inherit target shareholders through stock swaps. This adjustment is stronger when legacy shareholders are more influential and reveal a greater preference for dividends through portfolio holdings and trading behavior. Country-level differences in dividend taxes, governance quality, and population age further shape the extent of adjustment in ways consistent with dividend preferences. Pre-closing, differences in dividend payout discourage the use of stock as a payment method.

Publication Type: Article
Publisher Keywords: Dividend policy, Mergers and acquisitions, Clientele effect
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
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