Firm Characteristics Over Time by Dividend Payment Pattern and Firm Size

Abstract

This paper examines relationships between four dividend payment patterns and firm size using seven relevant financial variables from prior studies. Growth rates on the means of these variables are obtained from CRSP using large sample (quarterly) data in the time span 2000 to 2012. The four dividend payment pattern groups represent traditional dividend theory, dividend irrelevance theory, dividend initiators, and a residual/catering theory approach. Results indicate that small firms following a traditional or a residual/catering payment pattern have been most attractive for investment purposes. Surprisingly, both small and large dividend initiators are not being rewarded by the market. Recommendations for future research are discussed.