The dominant factors of dividend policies: Capital needs or agency problems? —— An empirical study based on the introduction of high-speed rail in cities of China

To regulate the dividend behavior of listed companies, it is essential to identify the dominant factors influencing dividend policies. The introduction of high-speed rail (HSR) in cities can enhance market accessibility, generating competition, growth and governance effects, thus providing an opportunity to address this issue. Using a sample of Chinese A-share listed companies, this study finds that list companies' cash dividend levels significantly decrease after the introduction of HSR in a city. This indicates that capital needs, rather than agency problems, are the dominant factor influencing the company's dividend policy. And the capital needs originate from competition effects rather than growth effects. Furthermore, this paper rules out potential interference from financing environment and governance effects. The findings support the capital needs hypothesis induced by competition effects and offer insights for regulating dividend policies of listed companies, promoting long-term stable and healthy development of the capital market.