Does Investor Protection Affect Corporate Dividend Policy? Evidence from Asian Markets
Bulletin of Economic Research, Forthcoming
21 Pages Posted: 13 Dec 2021
Date Written: October 16, 2021
Abstract
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.
Keywords: Investors protection; Dividend policy; Common-law; Financial market development; Asian markets
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