Corporate Governance and Dividend Payout Policy: Beyond Country‐level Governance

Chang, Bin; Dutta, Shantanu; Saadi, Samir; Zhu, Pengcheng

doi:10.1111/jfir.12159

Cited by 19 publications

(10 citation statements)

References 85 publications

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“…In columns 3, 5, 6 and 7, we include the index of shareholder rights (SR) calculated by La Porta et al (2000aPorta et al ( , 2000b, and used more recently by Lepetit et al (2018) and Chang et al (2018). Contrary to our third hypothesis, the negative and significant coefficients of the SR variable lend support to the substitution hypothesis such that dividends may act as a substitute mechanism to make up for poorer legal shareholder protection.…”

Section: Resultsmentioning

confidence: 94%

“…These authors introduce two alternative hypotheses regarding the agency theory of dividends. The outcome hypothesis predicts that firms in countries with better shareholder rights pay more dividends in order to disgorge cash and decrease the free cash flow (Chang, Dutta, Saadi, & Zhu, 2018). The opposite argument is to consider the legal framework as a substitute, namely the substitution hypothesis, with dividends being a way to make up for poor shareholder protection in order to keep open the option of raising external capital in the future.…”

Section: Dividends and Institutional And Legal Factorsmentioning

confidence: 99%

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Have European banks maintained their payout policy during the crisis? The role of scrip dividends

et al. 2020

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We analyse the trend among 79 banks from 20 European countries towards scrip dividends. Whereas banks do not seem to smooth cash dividends, they do smooth total dividends, which include both cash and scrip dividends. We also find that the new legal requirements (resulting from the Basel III Accord and other country‐level laws) have different implications on cash and scrip dividends. Whereas the need for better and more capital imposed by these rules has led banks to cut cash dividends, there is a positive relationship between the legal requirements on capital adequacy and scrip dividends.

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Section: Resultsmentioning

confidence: 94%

Section: Dividends and Institutional And Legal Factorsmentioning

confidence: 99%

Have European banks maintained their payout policy during the crisis? The role of scrip dividends

et al. 2020

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Section: National Culture and Corporate Financial Decisionsmentioning

confidence: 92%

“…For instance, Fidrmuc and Jacob (2010) concurred that culture is an important factor in assessing the different dividend policies of different firms around the world. Zheng and Ashraf (2014) and Chang et al (2018) examined the association of three dimensions of national culture and dividend policies of banks and find that the significant impact of the dimensions on dividend policies. They asserted that societies that are more inclined to long-term orientation, high uncertainty avoidance and low masculinity are reluctant to pay dividends or prefer to pay reduced dividends.…”

Section: Other Dimensions and National Culturementioning

confidence: 99%

A survey on national culture and corporate financial decisions: current status and future research

Kutan

Laique

Qureshi

et al. 2020

IJOEM

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PurposeThe extant literature provides substantial evidence that various facets of national culture play a significant role in corporate financial decision making. We systematically review the role of national culture on the various thematic domains of corporate financial decision making to outline what have been studies thus far and what needs to be studied.Design/methodology/approachKeywords such as national culture, organizational culture, power distance, uncertainty avoidance, masculinity, risk aversion and individualism for a search in the prominent academic literature databases are used. The studies related to the corporate financial decision making that is tied with these keywords are identified and selected for the systematic review.FindingsThe review of extant literature suggests strong evidence that national culture has a significant role in influencing corporate cash holding, corporate risk-taking, individual behaviour of the financial managers and initial public offering by the corporations. The review also indicates, although extant studies have examined the role of national culture in the key corporate financial decisions, evidence on the role of national culture in the firm's investment efficiency aspects is rather scarce. Also, what explains the role of national culture in corporate financial decision making has not been empirically exploited through causal mechanisms.Practical implicationsThe findings of the studies help advance our understanding of the current research status concerning the role played by the national culture in shaping corporate financial decisions and raise important future calls.Originality/valueTo best of our knowledge, no prior study has systematically reviewed the role of national culture in the thematic domains of corporate financial decision making.

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“…However, researchers indicate that country-level cultural variables may capture other factors, such as governances, creditor rights and stock market development in a country (Bae, Chang and Kang, 2012;Stulz and Williamson, 2003). Chang et al (2018) indicate that cross-country studies generally support La Porta, Lopez-de-Silanes and Shleifer's (2000) outcome model of a positive relation between country-level governance and dividend, whereas studies at country levels are inconclusive about the relationship between corporate governance and dividend. Additionally, Davaadorj (2019) and Hasan et al (2021) use US data and show that social capital positively affects dividends.…”

Section: Introductionmentioning

confidence: 99%

Is Social Trust a Governance Mechanism? Evidence From Dividend Payouts of Chinese Firms

Goodell

Liu

et al. 2022

British J of Management

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While management studies show that micro‐level trust within and between firms affects firm performance and innovation, it is unclear how macro‐level trust, namely social trust, affects corporate decisions. Addressing this is important because micro‐level trust is shaped by macro‐level social norms. A growing literature finds that corporations are influenced by local social norms. Drawing from this insight and using various measures of social trust, we examine the impact of social trust on dividend payouts. We find that levels of social trust, both in terms of directly measured trust and trust inferred from concomitant levels of civic social capital, negatively impact dividend payouts of local firms across Chinese provinces. We argue that community social trust supplies governance and plays a substitute role for dividend payouts, with a higher level of social trust engendering a lower demand for dividend payouts. This negative effect is more pronounced for younger firms, companies with high growth potential and firms in regions of less‐developed institutional environments. We further show that agency cost plays an important mediating role, since high social trust reduces agency cost, jointly affecting dividends. Firms in high‐trust regions make meaningful use of their greater retained earnings for research and development and innovations.

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Corporate Governance and Dividend Payout Policy: Beyond Country‐level Governance

Cited by 19 publications

References 85 publications

Have European banks maintained their payout policy during the crisis? The role of scrip dividends

Have European banks maintained their payout policy during the crisis? The role of scrip dividends

A survey on national culture and corporate financial decisions: current status and future research

Is Social Trust a Governance Mechanism? Evidence From Dividend Payouts of Chinese Firms

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