Senior Manager's Overconfidence And The Peer Effects In Dividend Payment

As one of the most important financial decisions of the company,dividend payment is closely related to investment,financing and other decisions.What on earth affects the dividend policy?The classic theory explains dividend payment under the assumption of rational decision-maker and perfect market,but more and more abnormal phenomena such as "iron cock",large stock dividends and dividend clustering indicate that the decision-maker and company's irrational behavior will directly affects the dividend decision's process and outcome.Based on the behavior dividend policy,the article attempts to introduce the peer effects to dividend decision-making research,and gives a more realistic and persuasive explanation to the dividend clustering.At the same time,taking the irrational characteristic of senior managers?overconfidence into account to see whether there is a moderating effect between overconfidence and peer effects.The results show that:(1)In analyzing the mechanism of peer effects,we find that the peer effects can be rational through social learning effects,and irrational out of reputation concerns or catering incentives.(2)Using a large sample of China public companies from 2008 to 2017,we find that there are peer effects in dividend policies.Firms',dividend policies are significantly influenced by the policies of their industry peers.Compared to a firm with no dividend paying peers,a firm with all dividend paying is more likely to pay dividends.(3)This paper also discloses that peer effects comply with the closer-preference and of imitation with the evidence that peer effect is more obvious only when both the company and it's peers have a larger size and longer age,and it also complies with the logic law with the evidence that peer effect is more obvious when the company's profitability of peers is better.(4)The peer effects in dividend payment also show industry differences.The peer effects are more obvious when there is a high competition between peers and the peers are tracked by analyst.(5)Senior managers' overconfidence has a negative moderating effect on the peer effects.