The relationship among information asymmetry, dividend policy and ownership structure

•Firms with higher information asymmetry are less likely to pay dividends.•State-controlled firms with higher information asymmetry would pay higher dividends compared to non-state-controlled firms.•The split share structure reform enhanced information transparency, leading to a positive moderating...

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Bibliographic Details
Published in:Finance research letters 2017-02, Vol.20, p.1-12
Main Authors: Lin, Tsui-Jung, Chen, Yi-Pei, Tsai, Han-Fang
Format: Article
Language:English
Subjects:
Dividend policy
Information asymmetry
Ownership structure
Split share structure reform
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Summary:•Firms with higher information asymmetry are less likely to pay dividends.•State-controlled firms with higher information asymmetry would pay higher dividends compared to non-state-controlled firms.•The split share structure reform enhanced information transparency, leading to a positive moderating effect on the relation between information asymmetry and dividend policy. This study examines the relationship among information asymmetry, dividend policy and ownership structure for Chinese listed firms from 2003 to 2012. We find that firms with higher information asymmetry are less likely to pay dividends. Further, the sample is divided into state-controlled and non-state-controlled firms, and the results show that state-controlled firms with higher information asymmetry would pay higher dividends compared to non-state-controlled firms. In addition, we find that the split share structure reform enhanced information transparency, leading to a positive moderating effect on the relation between information asymmetry and dividend policy.
ISSN:1544-6123
1544-6131
DOI:10.1016/j.frl.2016.06.008