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<p>We analyse the influence of financial constraints on the peer effect of dividend decision in China by employing the Carhart four-factor model to construct instrument variables of peer influence. We find that (1) the decision of whether to pay cash dividends (DIV) is significantly influenced by peers, and the estimated marginal effect is 0.53%, but the question of whether to pay catering dividends and the extent of such dividends to be paid are not significantly affected by peers. (2) Under the semi-mandatory dividend policy in China, financial constraints will significantly reduce peer influence on the dividend level. (3) Peer influence on DIV is more pronounced among companies that face high financial constraints.</p>
</abstract>

We analyse the influence of financial constraints on the peer effect of dividend decision in China by employing the Carhart four-factor model to construct instrument variables of peer influence. We find that (1) the decision of whether to pay cash dividends (DIV) is significantly influenced by peers, and the estimated marginal effect is 0.53%, but the question of whether to pay catering dividends and the extent of such dividends to be paid are not significantly affected by peers. (2) Under the semi-mandatory dividend policy in China, financial constraints will significantly reduce peer influence on the dividend level. (3) Peer influence on DIV is more pronounced among companies that face high financial constraints.

The influence of financial constraint on peer influence of cash dividend decision – Evidence from China

Yunnan University of Finance and Economics

Applied Mathematics and Nonlinear Sciences

This work is licensed under the Creative Commons Attribution 4.0 International License.

We analyse the influence of financial constraints on the peer effect of dividend decision in China by employing the Carhart four-factor model to construct...

The influence of financial constraint on peer influence of cash dividend decision – Evidence from China

Published Online: Nov 12, 2021

Page range: 309 - 322

Received: May 07, 2021

Accepted: Jul 23, 2021

DOI: https://doi.org/10.2478/amns.2021.2.00038

Keywords
dividend decision, peer influence, financial constraint, conduction path, Carhart four-factor model

© 2021 Xiaolan Wang et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

The influence of financial constraint on peer influence of cash dividend decision – Evidence from China

Published Online: Nov 12, 2021

Page range: 309 - 322

Received: May 07, 2021

Accepted: Jul 23, 2021

DOI: https://doi.org/10.2478/amns.2021.2.00038

Keywordsdividend decision, peer influence, financial constraint, conduction path, Carhart four-factor model

© 2021 Xiaolan Wang et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
dividend decision, peer influence, financial constraint, conduction path, Carhart four-factor model