Local corruption and dividend policy: Evidence from China

Bin Dong, Yizi Chen and Cunbin Fan

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

Abstract: In this study, we first predict that local corruption increases the risk of expropriation by governments, thus encouraging appropriation of minority shareholders by controlling shareholders, and consequently reducing dividend payouts. Then, using a sample of Chinese A-share listed companies from 1998 to 2017, we empirically identify that local corruption negatively affects corporate dividend payouts. Further study shows that this effect is more pronounced in state-owned enterprises and enterprises within secure investor protection environments. Finally mechanism analysis supports our theoretical prediction that local corruption can reduce dividend payouts through the expropriation by controlling shareholders.

Keywords: Local corruption; Dividend policy; Natural experiment; Tunneling (search for similar items in EconPapers)
JEL-codes: D73 G34 G35 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000277

DOI: 10.1016/j.frl.2022.102698

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