Dual-class share structure on the dividend payout policy: Evidence from China Concepts Stocks |
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| Institution: | 1. The University of Texas at San Antonio, USA;2. RMIT University, Australia;3. School of Finance, Institute of Financial Openness and Asset Management, Guangdong University of Foreign Studies, China;1. School of Finance, Central University of Finance and Economics, China;2. School of Finance, Central University of Finance and Economics, Shahe Higher Education Park, Changping District, Beijing 102206, China;1. Federal University of Espírito Santo (UFES), Av. Fernando Ferrari, 514, Vitória, ES 29075-910, Brazil;2. Coppead Graduate School of Business at the Federal University of Rio de Janeiro (COPPEAD/UFRJ), R. Pascoal Lemme, 355, Rio de Janeiro, RJ 21941-918, Brazil |
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| Abstract: | This study investigates the impact of the dual-class share structure on the dividend pay-out policy for China Concepts Stocks listed on the US stock exchanges. Using a unique and hand-collected dataset, we find that the dual-class share structure negatively affects the propensity to pay dividends and the dividend payout ratios. Among firms with dual-class share structures, the divergence between voting and cash-flow rights also negatively affects the propensity to pay dividends and the dividend payout ratios. Furthermore, these dual-class firms are more susceptible to the tunneling to controlling shareholders. Our findings highlight the potential cost of adopting dual-class share structures in China, and the importance of external monitoring for Chinese US-listed firms with dual-share structure. |
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