Corruption, national culture, law and dividend repatriation policy

Muhammad Tahir, Haslindar Ibrahim, Abdul Hadi Zulkafli and Muhammad Mushtaq

Journal of Multinational Financial Management, 2020, vol. 57-58

Abstract: This study aims to examine the effect of corruption, national culture, and rule of law on the dividend repatriation policy of foreign subsidiaries of US multinational corporations (MNCs) in 51 countries. The findings reveal that foreign subsidiaries of US MNCs repatriate lower dividends from host countries that have a higher rate of corruption. Additionally, findings suggest that foreign subsidiaries of US MNCs repatriate higher dividends from individualistic countries. Further, weak legal protection in the host country leads to higher dividend repatriation. Moreover, given an effective legal system in a host country, foreign subsidiaries of US MNCs with higher growth opportunities repatriate lower dividends. Finally, this study finds that foreign subsidiaries of US MNCs functioning in countries with a higher rate of corruption, individualistic culture, and the strict rule of law adjust faster towards optimal dividend repatriation policy. The findings are robust to alternative estimation methods and measures.

Keywords: Dividend repatriation policy; Corruption; National culture; Rule of law; Speed of adjustment; Foreign subsidiaries (search for similar items in EconPapers)
JEL-codes: F23 G34 G35 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:57-58:y:2020:i::s1042444x20300475

DOI: 10.1016/j.mulfin.2020.100658

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