Covid-19 crisis and corporate cash dividend policies: evidence from Chinese listed companies

Xixiong Xu, Cuiliang Lin and Youliang Yan

Applied Economics Letters, 2023, vol. 30, issue 2, 178-184

Abstract: Drawn on signalling theory, this paper investigates the impact of uncertainty caused by COVID-19 on corporate dividend policy. Using data from Chinese listed companies, the empirical results document a negative relationship between the COVID-19 crisis and corporate cash dividend payments. Moreover, the negative association between COVID-19 and cash dividend is more pronounced in large-scale firms and state-owned enterprises (SOEs). These findings imply that, compared with large-scale firms and SOEs, the competitive position of small enterprises and non-SOEs are more fragile and thus more dependent on cash dividends to release positive signals to outsiders, so as to deal with the uncertainty caused by COVID-19. In further analysis, this study also finds that those industries related to transportation and entertainment have a negative effect during the epidemic, and they are more likely to cut dividends to assure additional cash and flexibility.

Date: 2023
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DOI: 10.1080/13504851.2021.1980485

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