Cross‐listings and dividend size and stability: evidence from China

Abstract

We investigate the relationship between cross‐listings and dividend policy. We find that Chinese cross‐listed firms have lower and more stable dividends than their non‐cross‐listed peers, and that dividends become more stable the longer a company has been cross‐listed. We also find the strength of the cross‐listing/dividend policy relationship varies based on the market where the shares are cross‐listed. The strength of the relationship varies from B‐shares (least strong) to Hong Kong shares (stronger) to American Depository Receipts (strongest). Our results indicate cross‐listings may influence both dividend size and stability, and that this influence can vary by the type of cross‐listing.

What drives the dividend decisions in BRICS countries?

“…Moreover, Lam et al (2012) confirmed for Chinese companies, that those entities that are cross-listed pay lower cash dividends than companies with state ownership. This latter outcome is in line with Cheng et al (2021) study, which confirmed that cross-listed companies from China pay lower and more stable dividends than their single-listed counterparts. Cheng et al (2021) employed also Lintner's model and obtained lower SOA coefficient (0.41) for cross-listed companies than for non-cross-listed (0.53).…”

“…The obtained results of the SOA for the DR-subsample indicate that cross-listed do not follow highly smoothed dividend policy prevalent on the more mature, foreign stock exchanges. Higher level of the SOA for the cross-listed firms' subsample stays in contrast with Cheng et al (2021) study for Chinese companies. We believe that that difference in the SOA levels is related to, first more heterogeneous research sample in our study, and second to divergent definitions of dependent variable in Lintner's equation.…”

“…In general, their findings confirmed that the average actual payout ratio for Chinese companies is situated between the payout ratios for emerging and developed markets. Moreover, Cheng et al (2021) study revealed moderate level of dividend smoothing among Chinese companies and confirmed that free cash-flow, ROE, and size are positively, whereas higher growth opportunities and financial leverage are negatively related to dividend levels paid by Chinese companies. Finally, Cheng et al (2021) noted that larger and more cash abundant companies with higher ownership concentration exhibit higher variability of dividends.…”

“…Moreover, Cheng et al (2021) study revealed moderate level of dividend smoothing among Chinese companies and confirmed that free cash-flow, ROE, and size are positively, whereas higher growth opportunities and financial leverage are negatively related to dividend levels paid by Chinese companies. Finally, Cheng et al (2021) noted that larger and more cash abundant companies with higher ownership concentration exhibit higher variability of dividends. On the contrary market-to-book ratio and leverage are negatively related to dividends variability.…”

Financial slack, institutional shareholding and enterprise innovation investment: evidence from China

“…Our paper selects 2,829 non‐financial A‐share listed companies in 15 industry sectors from the China securities markets over the period from 2011 to 2018. In China, only stocks traded between Chinese domestic investors are categorised as A‐shares (Cheng et al ., 2020).…”