Industry Concentration, Firm Size, and Their Relationships with Dividend Policy
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2025-07-08
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en
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This thesis examines to what extent industry concentration, firm size, and their interaction relate to corporate dividend policy. While firm-level determinants of dividend behaviour have been widely studied, findings remain mixed. In contrast, the role of industry structure has received relatively little attention. Using panel data of U.S. publicly listed firms from 1997 to 2014, this thesis investigates whether the relationship between firm size and dividend policy differs across industries with varying concentration levels. Dividend policy is measured using the dividend payout ratio. Industry concentration is proxied by both the four-firm concentration ratio and a fitted Herfindahl-Hirschman Index, while firm size is defined as the logarithm of total assets. The results reveal that, among dividend-paying firms, larger firms distribute a smaller share of their earnings, and that firms in highly concentrated industries pay lower dividends than those in moderately concentrated industries. The negative effect of firm size is less pronounced in low-concentration industries, suggesting that competitive pressure moderates this relationship. These findings highlight that the association between firm characteristics and dividend policy is heterogeneous across industry structures. Dividend policy is thus not solely shaped by firm-level determinants, but also by the broader industry structure in which firms operate.
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Faculteit der Managementwetenschappen