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Social environment and corporate payouts

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  • Ashrafee Tanvir Hossain
  • Takdir Hossain
  • Lawrence Kryzanowski

Abstract

We investigate if macro-level social capital, which captures the notions of trust and honesty, has any effects on corporate payout policy. We find that firms situated in U.S. states (or counties) with higher levels of social capital (SC) have higher dividend payouts (DP). These results survive a battery of robustness tests dealing with inference and various forms of endogeneity. We find that the positive SC-DP association is more prominent when monitoring is weak. We also find that the positive SC-DP association remains when we account for internal social capital, political corruption, federal and state income taxes, and other possible dividend clienteles such as in-state pension funds and pension-age populations. Our study contributes to the literatures that regional locations and social considerations constitute clienteles who affect important corporate strategic decisions such as corporate payouts.

Suggested Citation

  • Ashrafee Tanvir Hossain & Takdir Hossain & Lawrence Kryzanowski, 2021. "Social environment and corporate payouts," The European Journal of Finance, Taylor & Francis Journals, vol. 27(14), pages 1413-1437, September.
    • Handle: RePEc:taf:eurjfi:v:27:y:2021:i:14:p:1413-1437
    DOI: 10.1080/1351847X.2021.1889631
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    Cited by:

    1. Qin, Wei & Liang, Quanxi & Jiao, Yan & Lu, Meiting & Shan, Yaowen, 2022. "Social trust and dividend payouts: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    2. Chowdhury, Hasibul & Hossain, Ashrafee & Masum, Abdullah-Al & Zheng, Jiayi, 2023. "Does corporate sexual orientation equality affect labor investment efficiency?," Global Finance Journal, Elsevier, vol. 55(C).
    3. Cordelia Omodero, 2022. "The Role Of Corporate Tax, Earnings And Debt In Determining Dividend Policy Of Firms," Business Management, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 3 Year 20, pages 46-69.
    4. Hossain, Ashrafee & Hossain, Takdir & Jha, Anand & Mougoué, Mbodja, 2023. "Credit ratings and social capital," Journal of Corporate Finance, Elsevier, vol. 78(C).
    5. Ongsakul, Viput & Papangkorn, Suwongrat & Jiraporn, Pornsit, 2023. "Estimating the effect of climate change exposure on firm value using climate policy uncertainty: A text-based approach," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).

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