Firm Productivity and Dynamics

Kelly, Timothy B.; Liaplina, Aleksandra; Tan, Shawn W.; Winkler, Hernán

doi:10.1596/978-1-4648-1025-1_ch3

Cited by 1 publication

(5 citation statements)

References 26 publications

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“…Many studies discuss and confirm the validity of survey information (Bai and Wu, 2020; Bellemare and Kroger, 2007; Glaeser et al. , 2000; Kelly and Stoumbos, 2021). For example, Glaeser et al.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…(2013) observe a negative relation between investor and employee rights and country trust, consistent with the need for protection being low in a high‐social trust environment. Kelly and Stoumbos (2021) argue that investors look to dividends when they do not trust reported earnings. Michaely, Rossi and Weber (2021) show that dividends signal safety.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…, 1997). For non‐US data, scholars in many disciplines use similar surveys, such as the European Social Survey (Kelly and Stoumbos, 2021; Strzelecka and Okulicz‐Kozaryn, 2018) and the World Values Surveys (Banerjee, 2018; Delhey, Newton and Welzel, 2011; Dudley and Zhang, 2016; Kelly and Stoumbos, 2021). Many studies discuss and confirm the validity of survey information (Bai and Wu, 2020; Bellemare and Kroger, 2007; Glaeser et al.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Similar measures are used by scholars worldwide (Banerjee, 2018; Delhey, Newton and Welzel, 2011; Dudley and Zhang, 2016; Glaeser et al. , 2000; Kelly and Stoumbos, 2021; Knack and Philip, 1997; La Porta et al. , 1997; Strzelecka and Okulicz‐Kozaryn, 2018).…”

Section: Introductionmentioning

confidence: 96%

“…Although their evidence apparently implies a negative relationship between social trust and dividends, their auxiliary analysis shows that social trust positively affects dividends, with the effect being weaker for firms with excess cash. Kelly and Stoumbos (2021) conduct cross‐country analyses and find that trust is positively related to firm valuation, as measured by Log(M/B), but trust interacted with dividend payers negatively affects Log(M/B). Their aggregated evidence indicates that the positive effect of dividends on stock valuation is weaker in high‐trusting countries.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

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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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%