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Cash Dividend, Principal-agent Problem and Local Chairperson: Evidence from China

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  • Xiaohong Yu
  • Maonan Chen
  • Liping Zhang

Abstract

This paper studies the relationship between the local chairperson of the board and the cash dividend distribution level by using annual data from A-share listed firms in China. Firstly, the empirical results show a firm’s cash dividend distribution level will increase when the firm has a local chairperson. The analysis of mediating effect concludes that the local chairperson can improve corporate performance by alleviating the first type of principal-agent problems, and this ultimately increases its cash dividend distribution level. Secondly, the cross-sectional tests show this consistency has a greater effect on the cash dividend distribution levels of state-owned enterprises and those that embraced high-quality external audits. Finally, this relationship will be weakened in firms that have the more serious second type of principal-agent problems.

Suggested Citation

  • Xiaohong Yu & Maonan Chen & Liping Zhang, 2023. "Cash Dividend, Principal-agent Problem and Local Chairperson: Evidence from China," Global Economic Review, Taylor & Francis Journals, vol. 52(1), pages 51-70, January.
    • Handle: RePEc:taf:glecrv:v:52:y:2023:i:1:p:51-70
    DOI: 10.1080/1226508X.2023.2166973
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