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Mutual Funds’ Holdings and Listed Firms’ Dividend Payouts: Evidence from China

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Listed:
  • Jing Chi
  • Jingjing Yang
  • Martin Young

Abstract

This paper investigates the relationship between listed firms’ dividend policies and mutual funds’ investment decisions in China. We find that all types of mutual funds prefer to invest in companies that distribute earnings by way of dividends. Robustness checks show that mutual funds prefer cash dividends to stock dividends, but they are not particularly attracted to firms that pay high cash or high stock dividends. We further show that all types of mutual funds can positively influence listed firms’ cash dividend pay-out rates, but only transient (short-term) funds influence stock dividend increases of listed firms.

Suggested Citation

  • Jing Chi & Jingjing Yang & Martin Young, 2014. "Mutual Funds’ Holdings and Listed Firms’ Dividend Payouts: Evidence from China," Accounting and Finance Research, Sciedu Press, vol. 3(3), pages 1-84, August.
    • Handle: RePEc:jfr:afr111:v:3:y:2014:i:3:p:84
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    References listed on IDEAS

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    1. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
    2. Franklin Allen & Antonio E. Bernardo & Ivo Welch, 2000. "A Theory of Dividends Based on Tax Clienteles," Journal of Finance, American Finance Association, vol. 55(6), pages 2499-2536, December.
    3. Easterbrook, Frank H, 1984. "Two Agency-Cost Explanations of Dividends," American Economic Review, American Economic Association, vol. 74(4), pages 650-659, September.
    4. Kristine Watson Hankins & Mark J. Flannery & M. Nimalendran, 2008. "The Effect of Fiduciary Standards on Institutions' Preference for Dividend‐Paying Stocks," Financial Management, Financial Management Association International, vol. 37(4), pages 647-671, December.
    5. Yaniv Grinstein & Roni Michaely, 2005. "Institutional Holdings and Payout Policy," Journal of Finance, American Finance Association, vol. 60(3), pages 1389-1426, June.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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