We find that investors react more favorably to corporate announcements of share repurchases, SEOs, earnings, dividend changes, and acquisitions if the announcement is made immediately prior to or on holidays. These announcements are associated with more positive reactions for favorable events and less negative reactions for unfavorable events. This effect is robust to controls for market conditions and a selection bias, is accompanied by subsequent reversals, and is present in several international markets. Our findings suggest that predictable individual mood changes can cause biases in market reactions to firm-specific news.

This paper investigates the varying impact of government subsidies on corporate investment efficiency using micro-level data from Chinese listed firms. Through meticulous compilation of information on government subsidies revealed in financial statements, and the implementation of an innovative categorization methodology based on the nature and timing of funds (ex-ante versus ex-post), we shed light on the divergent effects of these subsidies. Our findings are as follows: (1) Government subsidies enhance corporate investment efficiency, yet their effects exhibit asymmetry by alleviating underinvestment while exacerbating overinvestment. (2) Functional subsidies exert a stronger influence on investment efficiency compared to selective subsidies. Specifically, functional subsidies prove more effective in addressing underinvestment, but also possess a higher likelihood of exacerbating overinvestment. (3) State ownership, firm size and dividend payments lead to heterogeneity in the effects of subsidies. (4) Corporate financial constraints serve as one of the mechanisms through which subsidies affect investment efficiency. This suggests that firms with easier access to financing may not effectively utilize subsidies, while those facing severe financial constraints are less prone to misusing them.

Using a comprehensive dataset for Chinese listed companies from 2009 to 2021, we find that online media is negatively associated with cash dividend level, and the proportion of positive news has a negative moderating effect on this relationship. Our results support the "information intermediary" effect and exclude the "external governance" and "market pressure" effects. We further propose that online media weakens the positive relationship between cash dividends and past earnings (rather than the future), indicating that cash dividends contain signals of improvement in past earnings and are replaced by online news. We also find that only firms with more positive news pay dividends that have signaling effects, and there is a synergistic effect between positive news and dividend signal. Additional results show that the effect of online media on dividend policy is more pronounced than traditional media, which has almost no influence. Our main conclusions remain valid after addressing potential endogeneity issues and conducting various robustness tests.

This study focuses on the unexplored informational role of labour dividend in the municipal corporate bond (MCB) market given China’s distinctive institutional origins. We aggregate the annual employments of public firms to the prefecture-city level and find that the firms’ employments aggregated are positively associated with contemporaneous scale of the MCB, whereas negatively associated with the issuing rate of the MCB. In the further analyses, we find that this information externality is conditional on the attributes of the employment characteristics (i.e., education, functional departments, and ownership nature). Mechanism analyses indicate that information accessibility, processing, dissemination, and efficacy are important channels through which the aggregate labour intensity is mobilized. And such information externality is reinforced after an institutional change enhancing the authenticity of employment information. This paper echoes previous studies of the macro value of aggregate accounting information and enriches the literature in labour and finance by highlighting that the labour dividend still exists and triggers MCB issuance in China.

Minority shareholder activism (MSA) on online interactive platforms is a new form of corporate governance in China. This paper investigates whether and how dividend-related MSA affects corporate dividend policies. We find listed firms are more likely to pay dividends and raise payout ratios with MSA. Our baseline findings are robust to a variety of robustness checks. We establish a causal relationship between MSA and future dividend payouts, with both instrumental variable approach and PSM-DID approach, and we provide evidence to show the increasing effect of MSA can be explained by exit threat and voting attendance. Our focused MSA complements the formal voting rights of minority shareholders and overcomes the absence of institutional investor monitoring. Overall, our findings suggest that minority shareholders can effectively monitor management when they are empowered with voice in the age of information.

We investigate how marginal corporate tax rate affects corporate policy changes in response to a regulatory credit crunch. With a surge in debt due to a fiscal stimulus after 2008, the Chinese government rolled out the “deleveraging” program in 2015 which, through tightening monetary policies, restricting credit flows, and regulating shadow banks, significantly increased firms’ cost of debt and the incentive to deleverage. With a difference-in-differences design, we find that high-tax-rate firms reduce leverage to a less extent than low-tax-rate firms after the initiation of the deleveraging program. This effect is stronger in non-state-owned firms and firms with less non-debt tax shields. More importantly, through retaining more debt, high-tax-rate firms reduce dividend and switch to equity financing to a less extent, and also cut less investments in fixed assets, R&D and human capital. We conclude that tax constitutes an important factor in shaping the micro-economic consequences of a credit crunch.

This study investigates the nexus between investor protection and dividend policy for 517 listed non-financial firms operating in Asian countries between the 2008- 2017 period. The dynamic panel data model (System-GMM) reveals that stronger investor protection is associated with higher dividend payouts, and firms increase dividends, specifically in response to the rise of the extent of disclosure and director liability and also ease of shareholder suits. Besides, the results highlight that firms pay out fewer dividends in cases of growth opportunity particularly in environments with stronger investor protection, more developed financial market, and common-law system. Results are robust when alternative specifications are implemented.

Prior studies have demonstrated that market timing is an important factor in determining firm investments and financing policies. We provide empirical evidence on the effects of market timing on equity-based compensation and stock dividend decisions. To avoid endogeneity, we exploit the setting of overvaluation resulting from the 2015 Chinese government’s open-market purchases of common stocks of public firms. We test whether the over-valued firms cater to managers’ and investors’ preferences of not receiving over-valued shares. Consistent with this catering hypotheses, we find that firms purchased by the government are less likely to issue equity-based compensation and stock dividends after government’s stock market intervention relative to other firms whose shares were not purchased by the government. These results are more pronounced when the over-valuation is likely driven by retail investors.

What are the benefits to a firm of having investors with gambling preference as shareholders? Motivated by studies showing that gambling investors prefer lottery-like stocks and require lower expected returns to take risk, we hypothesize that firms with positively-skewed assets can use stock splits to attract investors with gambling preference to share risk and to lower cost of equity. Indeed, analyzing a sample of Chinese firms that split their stocks through stock dividends and using proprietary trading data to measure retail investors’ gambling preference, we find that, on average, shareholders increase by 54% and retail gambling investors increase by 119% following stock dividends. Furthermore, while firms become more risk-taking, their cost of equity declines substantially, largely due to the increased retail gambling investors’ pricing influence. Thus, stock splits are effective for improving risk-sharing efficiency, and gambling investors contribute to lowering the cost of capital.

This paper documents a stock-dividend premium of around 10% when controlling for optimistic earnings growth and liquidity improvement. We propose an alternative explanation for the effect of stock dividends from the perspective of investor recognition. First, we find that stock-dividend premiums are positively related to an increase in investor base, particularly for firms with a small investor base. Second, an increase in investor base is due to individual investors, as they, especially those with a stronger propensity to gamble, are net buyers around the announcement of stock dividends, while institutional investors behave in the opposite manner. Finally, we show that after paying stock dividends, firms experience significant increases in speculative features, which are caused by clientele shifts toward individual investors as opposed to the undertaking of riskier projects by managers. As a whole, our results also indicate that an increase in investor base could be related to investors’ gambling preferences.