Webinar Series



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.


Session Chair: Zheng Michael SONG
Weilun Professor of Economics, Head of the Department of Economics Department of Economics, The Chinese University of Hong Kong and Senior Fellow, ABFER

10:00 am
Unraveling the Dividend Puzzle: A Field Experiment

Bohui ZHANG, Executive Dean, Presidential Chair Professor School of Management and Economics, The Chinese University of Hong Kong, Shenzhen

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
10:25 am
Xiumin MARTIN, Professor of Accounting, Olin School of Business, Washington University in Saint Louis
10:50 am
11:10 am

Updated 3 Jan 2024

Session Format

Each session lasts for 1 hour 10 minutes (25 minutes for the author, 25 minutes for the discussant and 20 minutes for participants' Q&A). Sessions will be recorded and posted on ABFER's web, except in cases where speakers or discussants request us not to.


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