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Ultimate Ownership, Corporate Diversification, and Cash Dividends: Evidence from China

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  • Xingquan Yang
  • Wencong Li
  • Yumei Fu

Abstract

Using a sample of listed companies from the Chinese stock market between 2003 and 2017, this article investigates the effect of corporate diversification on cash dividend payments and the exacerbating effects of the ultimate controller. Our results show that diversification reduces cash dividend payments and that a state-owned controller exacerbates such adverse effects; this exacerbating role is especially significant in cases of greater government intervention and greater political mobility pressure on executives who seek political advancement. Further study also shows that an increased marketization process (MP) and government quality (GQ) mitigate the negative impact of diversification on dividend payments, and that the mitigating effects of MP and GQ are particularly prominent in state-owned enterprises.

Suggested Citation

  • Xingquan Yang & Wencong Li & Yumei Fu, 2021. "Ultimate Ownership, Corporate Diversification, and Cash Dividends: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(13), pages 3878-3890, October.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:13:p:3878-3890
    DOI: 10.1080/1540496X.2020.1848815
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    Cited by:

    1. Bai, Min & Fu, Yumei & Sun, Mingwei, 2023. "Corporate diversification and labor investment efficiency: Evidence from China," Economic Modelling, Elsevier, vol. 127(C).

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