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Do foreign firms cater to American investors’ dividend desires ?

Author

Listed:
  • Tat-Kei Lai

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Travis Ng

    (CUHK - The Chinese University of Hong Kong)

  • Kwok Ping Tsang

    (Virginia Tech [Blacksburg])

Abstract

Will foreign firms alter their dividend policies to cater to minority American investors' tax preferences? Conceptually, in the context of foreign controlling shareholders making the tunneling-and-dividend decisions, foreign firms will not do so unless they value a broad American shareholder base. During a U.S. tax cut that increases American investors' dividend desires only from qualified foreign corporations (QFCs), the dividend policies of those QFCs domiciled in low withholding tax jurisdictions exhibit a significantly stronger catering pattern than others. The conceptual framework and the empirical results jointly suggest that some foreign firms see the value of a broad American shareholder base.

Suggested Citation

  • Tat-Kei Lai & Travis Ng & Kwok Ping Tsang, 2025. "Do foreign firms cater to American investors’ dividend desires ?," Post-Print hal-05370747, HAL.
    • Handle: RePEc:hal:journl:hal-05370747
    DOI: 10.1016/j.jimonfin.2025.103406
    as

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