Date: 14 Dec 2023 (Thu)
Webinar
Webinar Series:
Capital Marketing Development: China and Asia
Unraveling the Dividend Puzzle: A Field Experiment
14 December 2023, Thursday
10:00 am – 11:10 am, Thursday (Singapore Time, UTC+8)
[Unraveling the Dividend Puzzle: A Field Experiment]
The authors conducted a field experiment to explore why firms pay dividends. The authors change managers’ perception of agency concerns from outside investors, investors’ risk preference, the information gap with outside investors, and firms’ tax clientele by contacting publicly listed firms in China to test four dividend theories (agency, bird-in-hand, signaling, and tax clientele theories). The authors find that past payers (firms that paid dividends in the previous year) receiving the treatment of agency concerns increase their dividends relative to the control group. In contrast, firms receiving the other treatments do not experience changes in their dividend policy. The treatment effect of agency concerns in past payers is more prominent for firms with weaker governance and robust to various model specifications. A post-experimental survey confirms our treatment effects. The evidence suggests that the agency cost motive is the main determinant of a firm’s dividend policy.
Speaker
Bohui ZHANG, Executive Dean, Presidential Chair Professor School of Management and Economics, The Chinese University of Hong Kong, Shenzhen
Co-authors:
Xiaoqiao WANG, Assistant Professor, School of Management and Economics, The Chinese University of Hong Kong, Shenzhen
Jing XIE, Associate Professor in Finance, Department of Finance and Business Economics, University of Macau
Xiaofeng ZHAO, Associate Professor, Department of Finance and Insurance, Lingnan University
Discussant:
Xiumin MARTIN, Professor of Accounting, Olin Business School, Washington University in St. Louis
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Event Website
https://abfer.org/events/abfer-events/webinar-series/355:webinarseries-cmd-30
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About the Webinar
Financial market development goes hand-in-hand with economic growth. The development of China's capital markets in terms of size, regulations, capability, and efficiency has been impressive. China may now even lead globally in some dimensions, notably e-payments systems. Yet, China's capital markets are still a work-in-progress facing both generic and unique challenges. Other Asian capital markets have even greater uneven development. Some in advanced Asian economies have acquired globally acclaimed reputation and capabilities while various regulatory and structural weaknesses dwarf others. Corporations and investors have been inclined to arbitrage cross-border regulatory and developmental gaps; so the very uneven status of capital markets across Asia is a policy issue for the governments in the entire region and perhaps globally. Analysing the positive and negative lessons in the functioning of Asia's capital markets, and identifying reforms and applications of technology that could further improve Asian capital markets' allocation efficiency, financial inclusion, and forewarning against reforms that might cause problems can benefit practitioners, policymakers and researchers, and can contribute significantly to overall prosperity.
The ABFER and the University of Chicago's Becker Friedman Institute China (BFI-China), in collaboration with National University of Singapore (NUS) Business School, Shanghai Advanced Institute of Finance (SAIF), The Chinese University of Hong Kong (CUHK) Department of Economics, CUHK-Shenzhen and Tsinghua University PBC School of Finance (Tsinghua PBCSF), hope to provide a virtual network to benefit researchers, policymakers, and practitioners from Asia and beyond.