Corporate dividend policy, managerial overconfidence, myopia, and investor irrationality: a complex concoction

Abdullah AlGhazali, Richard Fairchild, Yilmaz Guney

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Corporate dividend policy is a puzzle, especially when considering the effects of economic and behavioural factors. We develop a theoretical analysis of corporate dividend policy in order to analyse the effects of the complex mix of managerial moral hazard, overconfidence, and myopia on managerial incentives to increase or decrease dividends. Furthermore, we consider the effect of investor irrationality that drives corporate dividend catering behaviour. We investigate how this complex mix of economic and behavioural factors is likely to affect dividend policy. Our analysis provides a deep theoretical underpinning to understanding these effects and provides a basis for future empirical research.
Original languageEnglish
Pages (from-to)(In-Press)
Number of pages31
JournalThe European Journal of Finance
Early online date8 Sept 2023
Publication statusE-pub ahead of print - 8 Sept 2023

Bibliographical note

This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (, which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.


  • Dividends
  • value
  • managerial overconfidence
  • myopia
  • catering
  • moral hazard


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