Dividends Behavior in State- Versus Family-Controlled Firms: Evidence from Hong Kong

He, Tina T.; Li, Wilson X. B.; Tang, Gordon Y. N.

doi:10.1007/s10551-011-1150-0

Cited by 57 publications

(38 citation statements)

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“…Studies on the relationship between CSR and financial performance are different and provide evidence that social performance enhances firm' wealth; it is thereby relevant to investigate the distribution of this wealth. Second, we extend prior research on the factors affecting the dividend policy such as corporate governance (Mitton, 2004), the national culture (Shao et al, 2010), and family or state ownership (He, Li, and Tang, 2012) by showing that high CSR score is associated with high dividend payout.…”

Section: Introductionsupporting

confidence: 64%

“…Beyond the fact that firm is encouraged to behave and create its wealth ethically and in a sustainable way keeping the interest of customers, suppliers, employees, communities, and shareholders aligned and going in the same direction; another 3 Gilson (1990) demonstrates that on average, only 46% of directors who sit on boards prior to financial distress and 43% of the CEO are still present when their firms emerge from bankruptcy. responsibility of CSR firms is to integrate the perspective of the fairness and ethic of wealth distribution between those who have contributed to its creation (He, Li, and Tang, 2012).…”

Section: Corporate Social Responsibility and Dividend Policymentioning

confidence: 99%

“…Managers, in low CSR firms would have more resources to manipulate, e.g. to increase their dividend payout, than managers in high CSR firms (He, Li, and Tang, 2012). Low CSR firms are, then, more likely to increase their dividend payout in order to signal their true value when the market undervalues their equity.…”

Section: H2: Only Some Individual Components Of Csr Are Relevant For mentioning

confidence: 99%

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Why Do Socially Responsible Firms Pay More Dividends?

Benlemlih¹

2014

SSRN Journal

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Using a sample of 22,389 US firm-year observations over the period from 1991 to 2012, we find that high CSR firms pay more dividends than low CSR firms. This is consistent with our expectation that socially responsible firms may use the dividend policy to manage the agency problems related to overinvestment in CSR. The analysis of individual components of CSR provides strong support for this main finding: five of the six dimensions used in the analysis are also associated with high dividend payout, namely, corporate governance, community, diversity, employee relations, environment. Furthermore, by analyzing the stability of dividend payout, we find that socially irresponsible firms adjust dividends quicker than do socially responsible firms: dividend payout is more stable in high CSR firms than in low CSR firms. Additional results show that firms involved in two controversial activities: military and alcohol are associated with low dividend payout which is likely due to the high cost of external funding for these firms as highlighted by Goss and Roberts (2011). Our findings are robust to alternative assumptions and model specifications, alternative measures of dividend payout, additional control variables, and several approaches to address endogeneity and selection bias issues.Keywords: Corporate social responsibility, dividend policy, agency theory JEL classification: G32, M14 *PhD Candidate in Finance -Grenoble University -CERAG UMR CNRS 5820 -BP 47, 38040 Grenoble Cedex 9, France -Mohammed.benlemlih@upmf-grenoble.fr. 2 Why do socially responsible firms pay more dividends?Abstract Using a sample of 22,389 US firm-year observations over the period from 1991 to 2012, we find that high CSR firms pay more dividends than low CSR firms. This is consistent with our expectation that socially responsible firms may use the dividend policy to manage the agency problems related to overinvestment in CSR. The analysis of individual components of CSR provides strong support for this main finding: five of the six dimensions used in the analysis are also associated with high dividend payout, namely, corporate governance, community, diversity, employee relations, environment. Furthermore, by analyzing the stability of dividend payout, we find that socially irresponsible firms adjust dividends quicker than do socially responsible firms: dividend payout is more stable in high CSR firms than in low CSR firms. Additional results show that firms involved in two controversial activities: military and alcohol are associated with low dividend payout which is likely due to the high cost of external funding for these firms as highlighted by Goss and Roberts (2011). Our findings are robust to alternative assumptions and model specifications, alternative measures of dividend payout, additional control variables, and several approaches to address endogeneity and selection bias issues.

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Section: Introductionsupporting

confidence: 64%

Section: Corporate Social Responsibility and Dividend Policymentioning

confidence: 99%

Section: H2: Only Some Individual Components Of Csr Are Relevant For mentioning

confidence: 99%

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Why Do Socially Responsible Firms Pay More Dividends?

Benlemlih¹

2014

SSRN Journal

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“…Sustainable corporate finance relates to the revenue growth path, which can be sustained financially internally without changing any of the basic operating and financial ratios and without resorting to a new equity issue (Przychodzen & Przychodzen, ). It also connects dividend policy more strictly to firms’ long‐term development goals (He et al, ).…”

Section: Methodsmentioning

confidence: 99%

“…Connecting sustainability to corporate finance is about addressing exploitative investment activities and maintaining proper balance between different operating and financial policies in a long‐term perspective (Haigh, ; Przychodzen & Przychodzen, ). Sustainable corporate finance also relates dividend policy to firms’ long‐term development (He, Li, & Tang, ) and requires a multidimensional approach (Soppe , ).…”

Section: Theoretical Framework and Development Of Hypothesesmentioning

confidence: 99%

Bridging the gap: How sustainable development can help companies create shareholder value and improve financial performance

Gómez‐Bezares

Przychodzeń

Przychodzeń³

2016

Business Ethics: A European Review

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This study examines the effect of integrating sustainability into corporate strategy on various aspects of shareholder value creation and financial performance in the British capital market. The employed method is based on the content analysis of corporate disclosures and a new technique for assessing the adoption of the corporate sustainability concept (embracing the environmental, social, and financial aspects of a company's policies at the same time). Using extensive data of FTSE 350 firms covering the years 2006-2012, 65 companies were selected as meeting corporate sustainability criteria. For the above period, we find that these firms were characterized by higher financial risk exposure, lower asset growth rates, lower BV/MV ratios, lower EVA ratios, and higher MVA ratios. Such relations were generally present among different size and industry groupings. The results support the thesis that firms that incorporate sustainability issues into their business operations are better able to leverage their resources toward stronger financial performance and shareholder value creation than other companies. The paper contributes to the literature by offering a more holistic approach to corporate sustainable performance measurement and shedding additional light on its relation to financial performance in the context of the recent global financial crisis and its direct aftermath.Business Ethics: A Eur Rev 2017; 26: 1-17 wileyonlinelibrary.com/journal/beer

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Corporate social responsibility and dividend payout policy in extraordinary time: Empirical study of South Africa

Buertey

Ramsawak

Dziwornu

et al. 2023

Corp Soc Responsibility Env

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Corporate social responsibility (CSR) is a strategic tool that firms use to gain competitive advantage and enhance profitability in the long run, yet its effect on dividend payout in extraordinary times is limited. Grounded in stakeholder and dual responsibility theories, this study examines the effect of CSR on the relationship between COVID‐19 and dividend payout. Data from the period 2015–2021 were obtained from 114 non‐financial listed firms on the Johannesburg Stock Exchange, South Africa, and analyzed by multivariate and logit regression techniques. COVID‐19 has a negative effect on the amount and likelihood of dividend payment, while CSR performance has a positive effect on the likelihood and amount of dividend payment. However, the result of the negative effect of COVID‐19 on dividend payment does not differ between high and low CSR performing firms. Conversely, the impact of COVID‐19 and CSR on dividend payment differ between high and low financial constraint firms. Shareholders should learn to manage their expectations of dividends payment during times of crisis like COVID‐19, as firms tend to focus more on addressing the needs of stakeholders through CSR initiatives, which will enhance profit in the long term, rather than paying out dividend to shareholders.

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Dividends Behavior in State- Versus Family-Controlled Firms: Evidence from Hong Kong

Cited by 57 publications

References 50 publications

Why Do Socially Responsible Firms Pay More Dividends?

Why Do Socially Responsible Firms Pay More Dividends?

Bridging the gap: How sustainable development can help companies create shareholder value and improve financial performance

Corporate social responsibility and dividend payout policy in extraordinary time: Empirical study of South Africa

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