Democracy and dividend policy around the world |
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| Institution: | 1. Osaka University, 1-7 Machikaneyama, Toyonaka, Osaka, 560-0043, Japan;2. University of Tsukuba, 1-1-1 Tennodai, Tsukuba, Ibaraki 305-8577, Japan;1. Bryant University – BITZH Program, Beijing Institute of Technology Zhuhai, No. 6 Jinfeng Road, Zhuhai, Guangdong, China;2. Division of International Banking & Financial Studies, A.R. Sanchez, Jr. College of Business, Texas A&M International University, 5201 University Boulevard, Laredo, TX 78041, USA |
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| Abstract: | This paper investigates how democracy influences corporate dividend policy. With a sample of 228,628 observations from 37 countries, we find that democracy is negatively associated with both the likelihood to pay dividends and the payout ratio. Moreover, we document that this effect is stronger when shareholders (creditors) are weakly (strongly) protected. These findings imply that the effect of democracy on corporate dividend policy is transmitted mainly through democratic procedures. Besides, we find that democracy also negatively affects dividend initiations. |
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| Keywords: | Democracy Dividend policy Democratic procedures Shareholder protection Creditor protection |
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