Assets Expropriation via Cash Dividends?Free Cash Flow or Tunneling

• 作者: Jeng-Ren Chiou Ting-Chiao Huang Yenn-Ru Chen
• 来源期刊: 中国会计学刊：英文版
• 学科: 经济
• 关键词: CASH HOLDINGS CASH DIVIDENDS OWNERSHIP control ASS
• 年，卷（期）: 2010,（Z1）
• 页码范围: 71-93
• 页数: 23页
• 分类号: F832.51

摘要

This study solves the dispute between the free cash flow and tunneling hypotheses in explaining the role of cash dividends on asset expropriation of the controlling shareholders in Chinese listed firms. Investors value more the cash dividends and the cash holdings of firms with lower ownership control than those of firms with higher ownership control. This is more consistent with the tunneling hypothesis. However, when investment opportunities are considered, the free cash flow hypothesis better explains firms’ dividend policy. Investors value more the cash dividends of firms with fewer investment opportunities and higher probability of expropriation. This study indicates that investors are concerned with the potential asset expropriation through cash payouts, unless firms possess high growth opportunities.