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.

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.

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.

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 a whole, our results also indicate that an increase in investor base could be related to investors' gambling preferences.

More than one in five listed firms in China initiate dividend payments during the year right before their initial public offerings (IPOs). This tendency, which seems to contradict the purpose of raising capital, constitutes the pre-IPO dividend puzzle. This paper examines this puzzle using manually collected Chinese data from 2006 to 2019. We find that firms initiating pre-IPO dividends tend to have lower IPO underpricing than non-initiating firms. We also find that the effect of pre-IPO dividend initiation on IPO underpricing is more pronounced for firms with stronger pre-IPO growth and profitability. Additional analyses indicate that initiating firms have better pre- and post-IPO operating performance and post-IPO stock performance. Moreover, initiating firms pay more dividends and have significantly higher investor attention after the IPOs. Collectively, the pre-IPO dividend initiation is not a short-term strategic behavior of low-quality firms but is intended to send positive signals and improve investors’ stock valuation.

We examine the effects of the world’s first comply-or-explain dividend regulation in China’s Shanghai Stock Exchange, which requires firms to either pay at least 30% of profits as dividends or explain the use of funds. We find that many firms increased their payout ratio to comply, by increasing dividends or decreasing earnings. Firms with high profitability, state ownership, and fewer agency conflicts were more likely to comply. However, complying firms subsequently issued more debt and had a decline in accounting performance and firm valuation. The evidence suggests that the comply-or-explain regulation increased firms’ dividends at substantial costs.

Using Chinese data, we investigate the impact of the China Semi-Mandatory Payout Policy that sets an explicit requirement that firms need to distribute at least 20% of their average annual net profits as cash/stock dividends accumulatively in three consecutive years before refinancing via seasoned equity offerings. Firms with the payout level below (above) the cutoff imposed by the Semi-Mandatory Payout Policy are regarded as Treated (Control) group. We find that Treated firms are more likely to cut investment, especially long-term innovation investment, and perform poorly compared to Control group due to lack of money. Treated firms also tend to use earnings management assisting in financing through the debt market as an alternative way to raise money. The negative impact of cutting investment caused by the Semi-Mandatory Payout Policy is more pronounced for firms suffering from severe financial constraints, firms having good corporate governance, and firms located in less financial development areas. We attribute findings to the difficulty of accessing capital that is implicitly increased the China Semi-Mandatory Payout Policy, which alters firms’ behavior leading to insufficient investments and destroys firms’ value.