Cash Dividend, Principal-agent Problem and Local Chairperson: Evidence from China

Xiaohong Yu, Maonan Chen and Liping Zhang

Global Economic Review, 2023, vol. 52, issue 1, 51-70

Abstract: This paper studies the relationship between the local chairperson of the board and the cash dividend distribution level by using annual data from A-share listed firms in China. Firstly, the empirical results show a firm’s cash dividend distribution level will increase when the firm has a local chairperson. The analysis of mediating effect concludes that the local chairperson can improve corporate performance by alleviating the first type of principal-agent problems, and this ultimately increases its cash dividend distribution level. Secondly, the cross-sectional tests show this consistency has a greater effect on the cash dividend distribution levels of state-owned enterprises and those that embraced high-quality external audits. Finally, this relationship will be weakened in firms that have the more serious second type of principal-agent problems.

Date: 2023
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DOI: 10.1080/1226508X.2023.2166973

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