Regulatory Fragmentation and Dividend Payouts

Hongkang Xu

Accounting and Finance, 2025, vol. 65, issue 3, 2733-2752

Abstract: Using the data sourced from the Federal Register, this study investigates the association between regulatory fragmentation and dividend payouts. I document a negative relation between regulatory fragmentation and both the likelihood and magnitude of dividend payouts. Additional analysis suggests that financial strains resulting from operational adjustments act as a pathway through which regulatory fragmentation impacts corporate payout policies. Furthermore, I find a shift among firms towards favouring more flexible payout mechanisms, such as share repurchases, in complex regulatory environments. The findings clarify the significant challenges posed by regulatory fragmentation, which prompt firms to adapt their payout strategies. By examining how regulatory landscapes influence corporate financial decisions, this study enriches the dividend policy literature and provides vital insights for policymakers regarding the broader economic repercussions of regulatory fragmentation.

Date: 2025
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