Do managers cater to investors’ demand for income?
Abstract
Investors have a higher demand for and place a higher valuation on income-generating assets such as high-dividend stocks when interest rates are low (Daniel et al., 2021). We examine whether managers cater to such investor demand for income by paying dividends when interest rates are low, and by not paying when interest rates are high to boost their firms' share prices. There is evidence of this when the controls for the known determinants of dividend policy are omitted. However, once the controls (most notably, for risk) are incorporated, the relationship disappears.
Fields of Study & Subjects
Fiscal Policy and Economic Growth
Economic Growth and Development
Publication details
- Journal / source
- Review of Corporate Finance
- Publisher
- Emerald
- Volume
- 6
- Issue
- 2
- Pages
- 163–199
- Publication date
- 12 June 2026
- Language
- EN