Non-Dividend Payout Behavior of Companies: Research on the Effect of Large Shareholders’ “Voting with Their Feet”

Jianxiong Hu, Fangzhi Liang and Cunhai Ji

Emerging Markets Finance and Trade, 2019, vol. 55, issue 15, 3667-3681

Abstract: This study explores the effectiveness of large shareholders’ “voting with their feet,” in motivating a listed company to alter its non-dividend payout behavior. We show that the split-share structure reform, which changed the company’s shares held by controlling shareholders and other large shareholders from nontradable shares to tradable shares, gave large shareholders the ability to exit and therefore could inhibit this behavior. Furthermore, when a company has a higher ownership concentration of controlling shareholders and a lower quality of external auditing, the inhibitory effect is more significant. This paper considers China representative of emerging markets and suggests another way to manage the non-dividend payout behavior of listed companies in emerging markets.

Date: 2019
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DOI: 10.1080/1540496X.2019.1627664

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