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A servant to many masters: Competing shareholders preferences and limits to catering

Manconi,A.
; 
Massa,M.
Abstract
We study what determines catering through the payout policy and how catering affects firm value. We create a catering index, measuring how the firm caters to its investors’ payout preferences. The index is based on the revealed payout preferences of mutual funds holding the firm’s stocks. Catering is constrained by market segmentation and dispersion in investor payout preferences. It is also associated with positive value effects: Firms increasing their catering index also experience an increase in value. Furthermore, greater catering ability is associated with a more positive market reaction to corporate announcements of equity issues and dividend payouts.
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Date
2013-12
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Tilburg University Research Output Collection
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Keywords
SDG 4 - Quality Education
Citation
Manconi, A & Massa, M 2013, 'A servant to many masters : Competing shareholders preferences and limits to catering', Journal of Financial and Quantitative Analysis, vol. 48, no. 6, pp. 1693-1716. https://doi.org/10.1017/S0022109014000052
URI
https://hdl.handle.net/20.500.14602/59012
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