 Social trust and dividend payouts: Evidence from ChinaWei Qin, Quanxi Liang, Yan Jiao, Meiting Lu and Yaowen Shan Pacific-Basin Finance Journal, 2022, vol. 72, issue C Abstract: Social trust helps to reduce information asymmetry and agency conflicts between insiders and investors, and thus alleviates the pressure on firms to pay cash dividends. Consistent with this view, we find that Chinese firms in low-trust regions make higher dividend payouts than those in high-trust regions. The negative effect of trust is more pronounced in firms with lower information transparency and weaker corporate governance. We additionally find a lower market reaction to dividend announcements for firms in high-trust areas, and moreover that the role of social trust is more important for firms that are lacking in political connections and located in areas with weak institutions. Our results are robust to alternative measures of social trust and dividends and the use of the instrumental variable approach to alleviate endogeneity concerns. Overall, the findings highlight the important role of social trust in corporate governance and corporate dividend policy, along with its ability to substitute for formal institutions. Keywords: Social trust; Dividend policy; Information asymmetry; Agency conflicts (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:72:y:2022:i:c:s0927538x2200021x DOI: 10.1016/j.pacfin.2022.101726 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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