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Democracy and dividend policy around the world

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  • Nguyen, Thi Tuyet Mai
  • Tran, Quoc Trung

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.

Suggested Citation

  • Nguyen, Thi Tuyet Mai & Tran, Quoc Trung, 2022. "Democracy and dividend policy around the world," The North American Journal of Economics and Finance, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:ecofin:v:62:y:2022:i:c:s1062940822000651
    DOI: 10.1016/j.najef.2022.101713
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    Cited by:

    1. Olayinka Oyekola & Sofia Johan & Rilwan Sakariyahu & Oluwatoyin Esther Dosumu & Shima Amini, 2023. "Political institutions, financial liberalisation, and access to finance: firm-level empirical evidence," Discussion Papers 2307, University of Exeter, Department of Economics.

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    More about this item

    Keywords

    Democracy; Dividend policy; Democratic procedures; Shareholder protection; Creditor protection;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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