Do ADR Firms Have Different Dividend Policies Than U.S. Firms? A Comparative Study

Tong, Shenghui; Murtagh, James P.; Proctor, Richard

doi:10.3390/ijfs10010014

Cited by 2 publications

(2 citation statements)

References 48 publications

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“…A dividend increase accompanied by IPO price discounts, a recent rights issue, or great dividend variation is associated with negative stock returns, suggests tunneling of dividends by IJMF 19,5 controlling shareholders. In addition, Tong et al (2022) examines dividend policies of ADRs and finds that dividend payments in ADRs may not be driven by their performance and growth potential.…”

Section: Dividend Policies Of Chinese Firmsmentioning

confidence: 99%

“…Despite its discreetness, tunneling through dividends hurts US investors' interests. Findings here calls for the US regulators to consider tightening scrutiny of the dividend practices among Chinese government-controlled firms, especially the dividend payments that are not driven by firms' performance or growth potential (Tong et al ., 2022).…”

Section: Signaling or Tunneling?mentioning

confidence: 99%

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Signaling or tunneling: the dividend policies of Chinese ADRs listed in the US

Zhao

2023

IJMF

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PurposeThis study tests the signaling and tunneling models of dividend policies by examining the relationship between the ownership structure and the dividend payout in a setting where strong institutional governance and weak firm-level governance coexist.Design/methodology/approachChinese American Depository Receipts (ADRs) listed in the US offer an excellent opportunity to study dividend policy where strong institutional governance and weak firm-level governance coexist. Using a sample of 161 Chinese ADRs from 2004 to 2018, this study examines the relationship between the firm's ownership structure and cash dividend policy.FindingsThis study shows that high levels of controlling shareholder ownership and high levels of state ownership are associated with high dividend payouts. A high level of controlling shareholder ownership has a negative effect on its firm value. Dividend payments in those firms mitigate the negative effect, consistent with the signaling (substitution) model. A high level of state ownership is beneficial to its firm value. However, high dividend payment in those firms decreases the benefit, supporting the tunneling model.Practical implicationsThis study covers 161 Chinese ADRs listed in the US with a total market capitalization of over $2 trillion and reveals that dividend tunneling could occur in Chinese government controlled ADRs. Findings in this study would offer valuable insights for US investors and regulators.Originality/valueThis paper extends the tunneling hypothesis to the topic of dividend policy in a setting where strong institutional governance and weak firm-level governance coexist. This study shows that tunneling through dividends can happen among Chinese government controlled ADRs in the US. It also complements the literature by extending the examination of the dividend tunneling model from a relatively small universe of master limited partnership (Atanssov and Mandell, 2018) to a larger universe of Chinese ADRs listed in the US with a total market capitalization over $2 trillion US dollars.

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Section: Dividend Policies Of Chinese Firmsmentioning

confidence: 99%

Section: Signaling or Tunneling?mentioning

confidence: 99%

Signaling or tunneling: the dividend policies of Chinese ADRs listed in the US

Zhao

2023

IJMF

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Characteristics of the Board of Directors and Dividend Policy: A Case Study of Banks in Western Balkans

Milašinović

Radojević

Jovković

2023

Naše Gospodarstvo/Our Economy

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This paper examines the influence of the size and participation of women in the board of directors on the dividend policy of banks in Western Balkans. The research covered 104 banks, observing their dividend policy from 2017 to 2019. The dividend payout ratio was measured by the dividend policy. A relatively small number of banks paid dividends during the observation period. By applying the Fixed-Effect model, it was determined that the size of the board of directors has a statistically significant positive impact on the dividend policy of observed banks. Concerning the participation of women on the board of directors, a statistically significant impact on the dividend policy of banks was not identified. In addition to contributing to the existing literature on corporate finances, the research results can be crucial to investors when deciding to invest funds in bank stocks.

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Do ADR Firms Have Different Dividend Policies Than U.S. Firms? A Comparative Study

Cited by 2 publications

References 48 publications

Signaling or tunneling: the dividend policies of Chinese ADRs listed in the US

Signaling or tunneling: the dividend policies of Chinese ADRs listed in the US

Characteristics of the Board of Directors and Dividend Policy: A Case Study of Banks in Western Balkans

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