Professional thesis
Open access

Heterogeneous Institutional Stock Ownership and Firms' Dividend Policies

ContributorsZheng, Hanwen
DirectorsChaieb, Ines
Number of pages36
Imprimatur date2023
Defense date2023

Agent theory suggests that cash dividends can reduce information asymmetry, but high dividends might harm the company's investment and its growth potential, resulting in less capital gain. This study confirms the positive relationship between institutional investors’ shareholding and firms’ dividend payouts in the Chinese market. Through vector autoregression, we find that institutional investors influence firms to pay more dividends during the period from 2003 to 2021. We also find that not all Institutions are dividend seeker, especially in the absence of capital gains tax in China's capital market, the institutions that are more professional with better research ability focus on capital gain and their shareholdings will not impact the firm’s dividend. While other institutions like banks, insurance companies, and trusts may suffer higher agency cost, and tend to require more dividends from firms. The results confirm the exit theories like agency theory, catering theory, and signal hypothesis from the perspective of heterogeneous institutions. Considering that China has a large number of state-owned enterprises that can be used to verify the agency theory or catering theory in dividend payout policies, we further test the relationship on state-owned firms and private-owned firms. We find that the relationship between heterogeneous institutional investors and firms’ dividend policies only exists in those private-owned firms, because those state-owned firms’ executives and ownership are both governments.

  • Agent Theory
  • Dividend Payout
  • Heterogeneous Institutional Ownership
  • State-Owned Firms
Citation (ISO format)
ZHENG, Hanwen. Heterogeneous Institutional Stock Ownership and Firms” Dividend Policies. 2023.
Main files (1)
  • PID : unige:177590
  • Thesis number : 0026

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