Dividend commitment and bond yields: An examination of wealth transfer effects

Guojun Wang, Yuetang Wang, Dan Yang and Linyin Cheng

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: This paper examines a new type of corporate governance mechanism that has emerged in China, namely, dividend commitment, and documents its wealth transfer effects on bond yields. We find the larger-commitment group exhibits greater bond yields than the smaller-commitment group. Further analysis reveals that bondholders pay more attention to the wealth transfer effects when government bailouts are not available, when investing in exchange-traded bonds, and when other guarantees are not offered. This study sheds light on the effects of a unique governance mechanism in the Chinese bond market and contributes to the literature on global finance and corporate governance.

Keywords: Dividend commitment; Corporate governance; Bond yield; Wealth transfer; Dividend policy (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000447

DOI: 10.1016/j.frl.2022.102719

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