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Social capital and payout policies

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  • Hasan, Mostafa Monzur
  • Habib, Ahsan

Abstract

In this paper, we investigate the relationship between regional social capital and corporate payout policies. Using a large sample of US data, we find a positive relationship between regional social capital and both the likelihood and the amount of cash dividend payouts. However, we find that social capital has no bearing on the likelihood and amount of stock repurchases. The results from additional analyses show that the relationship between social capital and dividends is more pronounced for less geographically dispersed firms. We also find that the network component of social capital has a greater effect on dividends than the social norm component. Our results are robust to alternative specifications of dividends and social capital and to the use of a two-stage least squares (2SLS) analysis to alleviate endogeneity concerns. Overall, we document that regional social capital plays an important role in influencing cash dividend payout policies.

Suggested Citation

  • Hasan, Mostafa Monzur & Habib, Ahsan, 2020. "Social capital and payout policies," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(1).
    • Handle: RePEc:eee:jocaae:v:16:y:2020:i:1:s1815566920300023
    DOI: 10.1016/j.jcae.2020.100183
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    4. Zadeh, Mohammad Hendijani, 2023. "Stock liquidity and societal trust," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
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    More about this item

    Keywords

    Social capital; Dividends; Stock repurchases; Corporate social responsibility;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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