Managerial Social Capital and Dividend Smoothing

We investigate the influence on a firm’s propensity to smooth dividends of a previously unexamined managerial personal attribute, social capital. We document that greater social capital is associated with a statistically and economically significant increase in dividend smoothing. Further, an examination of the channel through which social capital impacts dividend smoothing reveals that the effect is more pronounced for financially constrained firms. These findings are robust to alternative model specifications, different variable measurement, and tests for endogeneity.

Managerial Social Capital and Dividend Smoothing Presentation