A Catering Theory of Dividends

By Malcolm P. Baker, Jeffrey Wurgler. 2002

1,043 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/b29f72279e712581a4c47b7f4a21746ec746b10d

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In Accounting

1. C. Kwok
2. Omrane Guedhami
3. L. Shao
4. Wei Li
5. Qin Wang
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In Economics and Econometrics

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4. Wei Li
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8. Alok Kumar

Citations in the corpus

• Enterprise Risk Management and the Cost of Capital (2016, neutral): “Baker and Wurgler (2004) on the other hand argue that firms’ dividend policy caters to time-varying investor demand for dividend payers; firms pay dividends when investors put higher prices on payers.”
• Payout Policy in the 21st Century (2003, neutral): “10Our survey might more closely represent the supply side of dividends (i.e., views of managers) than it does the demand side (e.g., Baker and Wurgler, 2004).”
• Capital Market-Driven Corporate Finance (2009, neutral): “Baker & Wurgler (2004) correlate the propensity to pay dividends with four proxies for a so-called dividend premium in stock prices, including the difference between the average market-to-book ratio of dividend payers and nonpayers.”
• Investor Horizons and Corporate Policies (2013, neutral): “Baker and Wurgler (2004) argue that firms pay fewer dividends when firms that pay dividends are undervalued by investors.”
• CULTURE, CORPORATE GOVERNANCE, AND DIVIDEND POLICY: INTERNATIONAL EVIDENCE (2012, neutral): “Existing studies document that a firm’s dividend policy is affected by factors such as profitability, leverage, growth, agency costs, signaling incentive, risk, and liquidity, among others.1 Recently, Baker and Wurgler (2004a) propose a catering theory of dividends that the decision to pay dividends”
• Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory (2006, critical): “Baker and Wurgler (2004) argue that firms have ‘‘catering’’ incentives to pay dividends when the market overvalues dividend payers, so that firms pay dividends depending on stock prices and independent of their RE/TE ratios, a prediction that is inconsistent with our empirical results. (Nor, as has ”
• Multiple-Predictor Regressions: Hypothesis Testing (2009, neutral): “Baker and Wurgler (2004) estimate a multi-predictor model of dividend initiation as a function of three lagged variables which are autoregressive: the dividend premium (the difference between the market-to-book ratios for dividend payers and non-payers), the Citizen Utility dividend premium (the…”
• Dividend changes and catering incentives (2006, positive): “First, it fills a void left by Baker and Wurgler (2004a), who find no evidence of the critical prediction that the capital market’s response to dividend announcements depends on the dividend premium.”
• Weather-Induced Mood, Institutional Investors, and Stock Returns (2015, methodology): “The sentiment variables constructed in Baker and Wurgler (2004) are collected from Jeffrey Wurgler’s web site (http://people.”
• Ownership Structure and Cash Flows as Determinants of Corporate Dividend Policy in Pakistan (2010, positive): “Baker and Wurgler (1963) presented the other side of the picture in their Catering Theory and argued that management should give incentives to shareholders according to their demands, this is the way to cater the investors by paying smooth dividends when investors put premium on dividend paying comp”
• Expected Returns and Expected Growth in Rents of Commercial Real Estate (2010, neutral): “Dividends are paid at the discretion of the firm’s management, and there is extensive evidence that they are either actively smoothed, the product of managers catering to particular clienteles, or the result of management’s reaction to perceived mispricing (Shefrin and Statman (1984), Stein (1996), ”
• National culture and dividend policy (2010, background): “2Other explanations of the dividend puzzle relate to taxation (Poterba & Summers, 1984) and catering effects (Baker & Wurgler, 2004). International evidence for the catering theory is not conclusive. While Denis and Osobov (2008) and Eije and Megginson (2008) do not find supportive results, Ferris e”
• Valuation Approaches and Metrics: A Survey of the Theory and Evidence (2007, neutral): “Baker and Wurgler (2004a, 2004b) provide a behavioral rationale by pointing out that the decrease in dividends over time can be attributed to an increasing segment of investors who do not want dividends.”