Geographic variation in religiosity and its impact of dividend policies

The main aim of this research is to document the relationship between geographical
variations in the religiosity levels and the dividend policies adopted by firms. Using the data
provided by the Gallup International, we test our arguments on the firms headquartered
in different states of the United States. Our results show that firms headquartered in
states with high level of religiosity have higher payout ratios than firms headquartered in
states with low level of religiosity. These are results are robust across various proxies of
religiosity and dividend policies (decision to pay dividend, decision to increase dividend,
and dividend yield). We also show that value of dividend payouts is higher in states with
high level of religiosity. We extend prior literature by also documenting the moderating
role of religiosity for the value of dividend policy.