Intra‐industry conformity in dividend policy

Tom Van Caneghem (Hogeschool‐Universiteit Brussel, Brussels, Belgium Antwerp Management School, Universiteit Antwerpen, Antwerpen, Belgium)
Walter Aerts (University of Antwerpen, Antwerpen, Belgium)

Managerial Finance

ISSN: 0307-4358

Publication date: 10 May 2011



The purpose of this paper is to study the impact of intra‐industry conformity tendencies on dividend policy among a large sample of US firms.


The paper explores mimetic influences on dividend policy. Consistent with prior institutional research, the paper measures mimetic pressures as institutional prevalence or the pervasiveness of a feature of dividend policy within a firm's relevant environment.


The results reveal a significantly positive relationship between the lagged density of firms in the industry that pay a dividend and the probability of a focal firm paying a dividend. Moreover, for firms paying a dividend, results indicate that higher similarity in dividend payout among firms in the same industry induces more conformity between a focal firm and average industry practice. Overall, results are consistent with imitation in dividend policy.

Research limitations/implications

The results support the view that future research on dividend policy should value social and behavioral factors more explicitly in order to arrive at a more overall and consistent explanation of firms' dividend policy. Moreover, the results also illustrate the relevance of alternative theories in explaining dividend policy.

Practical implications

The results show that intra‐industry benchmarking of dividend policy plays a significant role in the USA.


This study documents the relevance of social imitation mechanisms behind dividend payout behavior and therefore adds to the current knowledge of the impact of behavioral processes on dividend policy.



Van Caneghem, T. and Aerts, W. (2011), "Intra‐industry conformity in dividend policy", Managerial Finance, Vol. 37 No. 6, pp. 492-516.

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