Exploring the causal effect of religious piety on dividend policy: evidence from historical religious identification

Pandej Chintrakarn, Pattanaporn Chatjuthamard, Pornsit Jiraporn, Young S. Kim

Research output: Contribution to journalArticle

Abstract

Theory suggests that religious piety is associated with greater risk aversion and more conservative financial policies. Returns to shareholders through dividends are much more certain than returns through capital gains expected to be realized far into the future. We hypothesize that religious piety leads to a higher likelihood of dividend payments. We exploit the variation in religious piety across the US counties and estimate the effect of religion on dividend policy. To draw a causal inference, we use historical religious piety in 1971 as the instrument. Our two-stage least squares results confirm that religious piety induces firms to pay larger dividends.

Original languageEnglish (US)
Pages (from-to)306-310
Number of pages5
JournalApplied Economics Letters
Volume26
Issue number4
DOIs
StatePublished - Feb 23 2019

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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