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Signaling, corporate governance, and the equilibrium dividend policy

Omar Esqueda

The Quarterly Review of Economics and Finance, 2016, vol. 59, issue C, 186-199

Abstract: The well-documented information content of dividends is contingent on the firm's corporate governance. Using cross-listing events, we find that firms reach a new equilibrium dividend policy after a shift in the level of shareholder protection and the direction of the dividend adjustment depends on the pre-cross-listing locus of control. Exchange-traded cross-listings can afford to decrease dividend payouts as they substitute dividends with better corporate governance. However, dividend distributions and the likelihood to pay dividends increase when cross-listings are controlled by insiders, supporting the signaling hypothesis. The cross-listing level and ownership structure convey useful information regarding future shifts in dividend payouts.

Keywords: Cross-listings; Dividend policy; Emerging markets; Signaling; Insider ownership; Corporate governance (search for similar items in EconPapers)
JEL-codes: G32 G35 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:59:y:2016:i:c:p:186-199

DOI: 10.1016/j.qref.2015.06.005

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