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Financial transparency and dividend policy: The moderating effect of analyst coverage

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  • Peng, Yifan
  • Li, Wenchang

Abstract

In this paper, we explore how financial transparency affects a firm's dividend policy, a strategy reflecting the balance between reinvestment and distribution of profits to shareholders. Exploiting a research sample of all A-share listed companies in China, we discover compelling evidence that a company's financial transparency is positively correlated with the amount of dividends. The positive effect is more evident for enterprises with less analyst coverage. We further demonstrate that operating efficiency and financing cost are plausible economic channels. Our findings still hold after addressing endogeneity problems. Overall, this study sheds light on the implications of financial transparency.

Suggested Citation

  • Peng, Yifan & Li, Wenchang, 2025. "Financial transparency and dividend policy: The moderating effect of analyst coverage," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325005331
    DOI: 10.1016/j.frl.2025.107270
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    References listed on IDEAS

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