Signaling vs. agency theory: What drives dividends of promoter-owned firms during a crisis?

Neha Gosain, Smita Kashiramka and Neeru Chaudhry

Research in International Business and Finance, 2025, vol. 73, issue PA

Abstract: This paper analyses the effect of the COVID-19 pandemic on the relationship between promoter ownership and dividends. Using a sample of listed firms between 2015 and 2021, we find that promoter control positively relates to dividends during normal (pre-crisis) times. This is attributed to the desire to communicate information about the firm’s prospects, supporting the signaling theory. The positive relationship is inversed during the crisis owing to agency motives of withholding resources. To the best of our knowledge, this is the first-ever India-based study examining ownership structure's impacts on the dividend policy during the COVID-19 crisis.

Keywords: Dividend policy; COVID-19 Pandemic; Promoter; India (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:73:y:2025:i:pa:s0275531924003830

DOI: 10.1016/j.ribaf.2024.102590

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