Soft Activism and Corporate Dividend Policy: Evidence from Institutional Investors Site Visits

58 Pages Posted: 6 Mar 2019 Last revised: 4 Feb 2020

See all articles by Xiaping Cao

Xiaping Cao

SUN YAT-SEN UNIVERSITY

Hanyang (Hans) Wang

Peking University - School of Economics

Sili Zhou

Fanhai International School of Finance and School of Economics, Fudan University

Date Written: February 1, 2020

Abstract

This paper documents that site visits as a type of soft activism, increase corporate cash
dividend in the post-event year. The casual link is built by using both quasi-natural
experiment and instrument variable approach. Site visits facilitate communication
among outside investors and incumbent managers, serving as external monitoring
substitute for internal control. We rule out alternative explanations related to
institutional ownership and internal governance quality. Instead we show that corporate
investors help reduce information asymmetry. Further studies suggest that the effect of
site visits is stronger when visits are conducted by security firms and directly involving
dividend related discussion. Finally, institutional site visits arouse more dividend-related proposals at following shareholder meeting. The paper supports the bright side
of site visits serving as soft activism, in a weak institutional environment.

Keywords: site visits; dividend pay; soft activism

JEL Classification: G34; G35

Suggested Citation

Cao, Xiaping and Wang, Hanyang (Hans) and Zhou, Sili, Soft Activism and Corporate Dividend Policy: Evidence from Institutional Investors Site Visits (February 1, 2020). Available at SSRN: https://ssrn.com/abstract=3326544

Xiaping Cao

SUN YAT-SEN UNIVERSITY ( email )

135 Xingang Xi Road
Guangzhou, 510275
China
+862084111154 (Phone)

Hanyang (Hans) Wang

Peking University - School of Economics ( email )

Beijing
China

Sili Zhou (Contact Author)

Fanhai International School of Finance and School of Economics, Fudan University ( email )

Room 520, Building 5, 220 Handan Road
Shanghai
China

HOME PAGE: http://siliz.weebly.com/

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