Companies with Semi-Annual Dividends Have Lower Beta than Annual Dividend Companies

A study has found that the beta, which indicates systematic risk, is lower for companies that pay dividends more frequently among South Korean listed firms. Companies that pay dividends semi-annually or more frequently consistently showed lower beta across various analytical models compared to those that pay annual dividends. The Korea Financial Research Institute published a report analyzing 1,640 non-financial listed companies on KOSPI and KOSDAQ from 2010 to 2024. The report examined the hypothesis that beta could decrease as the frequency of dividends increases, utilizing OLS panel regression analysis, difference-in-differences method, and propensity score matching. The key finding is that the beta of companies with semi-annual or more frequent dividends was lower than that of annual dividend companies, confirmed in both KOSPI and KOSDAQ markets. Notably, in KOSDAQ, companies that pay quarterly dividends exhibited a tendency for even lower beta. However, since the sample proportion of quarterly dividend companies is only 0.6% of the total, this result should be interpreted as 'preliminary evidence.' Even after controlling for dividend yield, a negative correlation between dividend frequency and beta remained, suggesting that dividend frequency could act as an independent corporate policy variable. The report proposed that creating an institutional environment to support the spread of semi-annual and quarterly dividends could serve as a policy tool. However, it did not conclude a causal relationship between dividend frequency and systematic risk, indicating that further verification is needed.

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