Mohammad Shahriar, Hossain (2024) Impact of Peer Pressure on Dividend Policy: Evidence From Food & Allied and Power & Fuel Sectors in Bangladesh. The International Journal of Banking and Finance, 19 (2). pp. 159-182. ISSN 1675-7227

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Abstract

Firms’ decisions are not independent of their peers. This study aims to assess the impact of peer pressure on firms’ dividend policy. In a sample of 29 firms from 2014–2020, this study employed a fixed effect regression model and revealed that Bangladeshi firms adjusted their dividend policy in response to their peers. Firms adjust the dividend payout ratio (DPR) by 5.6 percent as a response to their peers. Social learning theory, reputation-based model of peer influence, persuasion bias and rivalry-based theory of mimicking explain how peer influence affects a firm’s dividend policy. The findings of positive peer effects on dividend policy are robust to an alternative proxy of dividend policy – dividend yield. Therefore, the study implied that managers’decisions regarding the dividend policy are not independent of their peer firms. Investors can adjust their expectations of a firm’s dividend policy based on the overall dividend policy in the industry

Item Type:	Article
Uncontrolled Keywords:	Peer effects, dividend policy, payout policy, dividend payout ratio, corporate finance
Subjects:	H Social Sciences > HG Finance
Divisions:	UUM Press
Depositing User:	Mdm. Sarkina Mat Saad @ Shaari
Date Deposited:	11 Aug 2024 05:09
Last Modified:	11 Aug 2024 05:09
URI:	https://repo.uum.edu.my/id/eprint/31243

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