An Exploratory Study of Disappearing Dividends and Ceo Characteristics of American Firms

The percentage of firms paying dividends has been declining over the years. Previous literature reveals that dividends are disappearing not only because of changes in firm characteristics, but also because of a lower propensity to pay. Dividend policy is totally at the discretion of the top management, so if there is a lower propensity to pay; it would suggest that managerial characteristics or style has gradually shifted towards paying less or no dividends. This research discusses what are the discernible changes in managerial characteristics or management style with regards to disappearing dividends. It examines if there are any significant differences between managers who pay dividends and those who do not pay dividends. The study tries to discern if the managers who pay dividends are of a certain age group (comparatively older). Are they what are called the recession CEOs (CEOs who started their career during recessions); are they the depression babies (CEOs who were growing up during the great depression); are they the less overconfident CEOs, and/or are they the short-horizon CEOs? The study also looks to see if other personal characteristics viz; education, military service, or status in the company has any significant impact on dividend paying decision.