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Dividend or Growth Funds: What Drives Individual Investors' Choices?

Lookup NU author(s): Dr Dun Han, Dr Jose LiuORCiD

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).

Abstract

We study dividend fund buying behavior using over 80,000 individual Chinese mutual fund investors from a private Chinese mutual fund account dataset. Based on a variety of specifications and logistic regressions, we empirically investigate investors’ characteristics in choosing dividend-paying and/or growth mutual funds under different market scenarios. To the best of our knowledge, this research represents an initial attempt to study individual dividend investors in mutual fund markets. We find that older Chinese investors prefer dividend-paying funds less than growth funds, but this depends on different market conditions, and the age effect shows a nonlinear mode when considering age grouping. Moreover, investors’ prior experience plays a crucial role in choosing the fund type; however, the conclusions vary with market scenarios. In addition, female investors prefer more dividend-paying funds than do male investors, but investing experience counteracts this difference. We also find that geographic location is a contributor when investors decide the fund type.

Publication metadata

Author(s): Han D, Han LY, Wu YR, Liu P

Publication type: Article

Publication status: Published

Journal: International Review of Financial Analysis

Year: 2021

Volume: 77

Print publication date: 01/10/2021

Online publication date: 02/08/2021

Acceptance date: 30/07/2021

Date deposited: 30/11/2021

ISSN (print): 1057-5219

ISSN (electronic): 1873-8079

Publisher: Elsevier BV

URL: https://doi.org/10.1016/j.irfa.2021.101863

DOI: 10.1016/j.irfa.2021.101863

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