Social trust and dividend payouts: Evidence from China

Qin, W; Liang, Q; Jiao, Y; Lu, M; Shan, Y

Social trust and dividend payouts: Evidence from China

Qin, W Liang, Q Jiao, Y Lu, M Shan, Y

Permalink

Publisher:: Elsevier BV
Publication Type:: Journal Article
Citation:: Pacific Basin Finance Journal, 2022, 72, pp. 101726
Issue Date:: 2022-04-01

Closed Access

	Filename	Description	Size
	1-s2.0-S0927538X2200021X-main.pdf	Published version	643.84 kB	Adobe PDF	View/Open

Copyright Clearance Process

Recently Added
In Progress
Closed Access

This item is closed access and not available.

Full metadata record

Field	Value	Language
dc.contributor.author	Qin, W
dc.contributor.author	Liang, Q
dc.contributor.author	Jiao, Y
dc.contributor.author	Lu, M
dc.contributor.author	Shan, Y https://orcid.org/0000-0003-2156-8722
dc.date.accessioned	2022-11-14T04:35:22Z
dc.date.available	2022-11-14T04:35:22Z
dc.date.issued	2022-04-01
dc.identifier.citation	Pacific Basin Finance Journal, 2022, 72, pp. 101726
dc.identifier.issn	0927-538X
dc.identifier.uri	http://hdl.handle.net/10453/163446
dc.description.abstract	Social trust helps to reduce information asymmetry and agency conflicts between insiders and investors, and thus alleviates the pressure on firms to pay cash dividends. Consistent with this view, we find that Chinese firms in low-trust regions make higher dividend payouts than those in high-trust regions. The negative effect of trust is more pronounced in firms with lower information transparency and weaker corporate governance. We additionally find a lower market reaction to dividend announcements for firms in high-trust areas, and moreover that the role of social trust is more important for firms that are lacking in political connections and located in areas with weak institutions. Our results are robust to alternative measures of social trust and dividends and the use of the instrumental variable approach to alleviate endogeneity concerns. Overall, the findings highlight the important role of social trust in corporate governance and corporate dividend policy, along with its ability to substitute for formal institutions.
dc.language	en
dc.publisher	Elsevier BV
dc.relation	http://purl.org/au-research/grants/arc/DP210101004
dc.relation	http://purl.org/au-research/grants/arc/DP210101354
dc.relation.ispartof	Pacific Basin Finance Journal
dc.relation.isbasedon	10.1016/j.pacfin.2022.101726
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1501 Accounting, Auditing and Accountability, 1502 Banking, Finance and Investment
dc.subject.classification	Finance
dc.title	Social trust and dividend payouts: Evidence from China
dc.type	Journal Article
utslib.citation.volume	72
utslib.for	1501 Accounting, Auditing and Accountability
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2022-11-14T04:35:19Z
pubs.publication-status	Published
pubs.volume	72

Abstract:

Social trust helps to reduce information asymmetry and agency conflicts between insiders and investors, and thus alleviates the pressure on firms to pay cash dividends. Consistent with this view, we find that Chinese firms in low-trust regions make higher dividend payouts than those in high-trust regions. The negative effect of trust is more pronounced in firms with lower information transparency and weaker corporate governance. We additionally find a lower market reaction to dividend announcements for firms in high-trust areas, and moreover that the role of social trust is more important for firms that are lacking in political connections and located in areas with weak institutions. Our results are robust to alternative measures of social trust and dividends and the use of the instrumental variable approach to alleviate endogeneity concerns. Overall, the findings highlight the important role of social trust in corporate governance and corporate dividend policy, along with its ability to substitute for formal institutions.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/163446