Abstract: This paper investigates an effect of local investor’s attention on the firm dividend policy. I derive a novel proxy of investor’s attention by using data on the requests for financial information from the SEC. I obtain the location of each request by identifying the geographic information in the IP address. Using a large sample of firms from 2003 to 2016, I document that the percentage of local investor’s views is negatively related to firm’s payout policy. I further identify that this negative relation is due to the information asymmetry between investors and the company by separating the original sample according to the level of analyst coverage, information intensity, location of firm and institutional ownership. In order to deal with endogenous problem, I use state level household internet access as an instrument variable. The result is still significant as more local views will decrease the firm’s dividend payout. Lastly, my result remains significant after using other measurement for dividend and doing a propensity score matching. Taken together, my findings suggest that local attention significantly affect the level of firm’s dividend payout negatively.
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