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The Impact of Investor Sentiment on Catering Incentives around the World

초록/요약

This study tests catering theory of dividend policies in twenty-one countries from 1991 to 2017. First, we show that there are important differences in corporate dividend policies across countries. Second, we find that the catering incentive is stronger when investor sentiment is low. Third, firms domiciled in countries with strong legal protections for investors are more likely to catering to investors, especially when investor sentiment is low. Our findings shed light to the factors contributing to the fluctuations in dividend catering around the world. (c) 2021 Elsevier B.V. All rights reserved.

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