A Study on the Impact of the Investor Service Center's Shareholding-Based Exercise of Rights on Dividend Smoothing
DOI:
https://doi.org/10.54097/857ab571Keywords:
Investor Service Center's exercise of rights, dividend smoothing, agency problems.Abstract
The shareholding-based exercise of rights by the Investor Service Center is an innovative practice for protecting the rights and interests of minority investors. Using A-share listed companies in Shanghai and Shenzhen from 2011 to 2024 as the research sample, this paper treats the 2016 policy of shareholding-based exercise of rights by the China Securities Investor Services Center as a quasi-natural experiment and constructs a multi-period difference-in-differences model to examine the impact of the Investor Service Center's exercise of rights on dividend smoothing. The results show that the Investor Service Center's exercise of rights imposes external regulatory pressure and raises dividend payouts, thereby exerting a negative effect on corporate dividend smoothing. Further analysis indicates that the Investor Service Center's exercise of rights reduces Type II agency costs and triggers short-term dividend increases, which in turn affect dividend smoothing. This paper enriches the literature on how the Investor Service Center's protection of minority investors influences dividend smoothing, and provides empirical evidence for the evaluation system and expected effects of subsequent rights-exercising activities.
Downloads
References
[1] Shleifer A, Vishny R W. A Survey of Corporate Governance. The Journal of Finance, 1997, 52(2), 737-783.
[2] Brav A, Graham J R, Harvey C R, Michaely R. Payout Policy in the 21st Century. Journal of Financial Economics, 2005,77(3):483-527.
[3] Brochet F, Loumioti M, Serafeim G. Speaking of the short-term: disclosure horizon and managerial myopia. Review of Accounting Studies, 2015,20(3).
[4] Ge W, Ouyang C, Shi Z, Chen Z. Can a Not-for-profit Minority Institutional Shareholder Make a Big Difference in Corporate Governance? A Quasi-natural Experiment. Journal of Corporate Finance, 2022,72(1):102-125.
[5] Larkin Y, Leary M, Michaely R. Do Investors Value Dividend-Smoothing Stocks Differently? Management Science, 2016, pp.1-27.
[6] Lintner J. Distribution of Incomes of Corporations Among Dividends, Retained Earnings and Taxes. American Economic Review, 1956,46(2):97-113.
[7] La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny R. Investor Protection and Corporate Governance. Journal of Financial Economics, 2000,58(1-2):3-27.
[8] La Porta R, Lopez-de-Silanes F, Shleifer A. Corporate Ownership around the World. The Journal of Finance, 1999,54(2):471-517.
[9] La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny R. Agency Problems and Dividend Policies around the World. The Journal of Finance, 2000,55(1).
[10] Yao S, Wang C, Cui X, Fang Z. Idiosyncratic skewness, gambling preference, and cross-section of stock returns: Evidence from China. Pacific-Basin Finance Journal, 2019,53.
[11] Thanatawee Y. Ownership structure and dividend policy: evidence from Thailand. International Journal of Economics and Finance, 2013,5(1):121-132.
[12] Zhang Xiaojing. Anchoring the Goal of Building a Financial Powerhouse and Promoting High-Quality Financial Development: Theoretical Framework and Practical Path. Economic Perspectives, 2024(2):3-16.
[13] Yang Bao. Can Dividend Smoothing Serve as a Market Stabilizer? Contemporary Finance&Economics, 2019(05):119-129.
[14] Li Maoliang, Li Changqing, Wei Zhihua. Are Dividend Policies of Chinese Listed Companies Stable? An Empirical Study Based on a Dynamic Panel Model. Journal of Shanxi University of Finance and Economics, 2014,36(03):33-42.
[15] Chen Xueying, Cheng Liubing, Liu Feng. Dividend Policy of Chinese Listed Companies: Institutions and Practice. Contemporary Accounting Review, 2024,1(01):20-50.
[16] Han Yun, Wu Zhanyong. Dividend Smoothing, Differentiated Dividend Regulation Policy, and Agency Efficiency. Management Science, 2020,33(05):141-152.
[17] Ren He, Zhao Xiuyun. Minority Shareholder Activism and Capital Market Pricing Efficiency: Evidence from the Investor Service Center's Exercise of Rights. Contemporary Economic Research, 2023(12):39-51-82.
[18] Chen Yanli, Jiang Yanfeng. Governance by Non-state-owned Shareholders and Dividend Smoothing: Empirical Evidence from Competitive State-controlled Listed Companies. Journal of Zhongnan University of Economics and Law, 2020(02):37-47.
[19] Liu Xing, Ren Xiaoyi. Does Greater Cash Dividend Smoothing Affect Listed Companies' Purchases of Wealth Management Products? Accounting Research, 2024(07):104-117.
[20] Zhang Qingjun, Jiang Yidi. The Impact of Dividend Smoothing on Corporate Debt Default Risk. Research of Finance and Education, 2022,35(03):3-14.
[21] Wang Xue, Yang Zhiguo. Investor Service Center's Exercise of Rights and Corporate Accounting Conservatism. Journal of Beijing Technology and Business University (Social Sciences), 2023,38(05):84-97.
[22] Yu Nutao, Miao Ruichen, Zhang Huayu. Does the Investor Service Center's Exercise of Rights Protect Minority Shareholders? Evidence from Controlling Shareholders' Equity Pledges. Accounting Research, 2024(06):87-101.
[23] Luo Jinhui, Li Yuan. The Governance Effect of Regulatory Minority Shareholders: Evidence from M&A Performance Commitments. Accounting Research, 2025(08):62-73.
[24] Xie Zhifei. Double Catering and Cash Dividend Smoothing: Empirical Evidence from Chinese A-share Listed Companies. Accounting Research, 2019(11):78-84.
[25] Chen Xiao, Wang Kun. Related-party Transactions, Corporate Governance, and State-owned Share Reform: Empirical Evidence from China's Capital Market. Economic Research Journal, 2005(04):77-86-128.
[26] Wang Bo, Yang Maojia. The Mechanism of ESG Performance on Firm Value: Empirical Evidence from Chinese A-share Listed Companies. Soft Science, 2022,36(06):78-84.
[27] Zeng Aimin, Wu Wei, Wu Yuhui. Spillover Effects of Minority Shareholder Activism on Bondholder Wealth: Empirical Evidence from Online Voting Data. Journal of Financial Research, 2021, No.498(12).
[28] Han Yun, Zhang Yun, Lu Xian. Does Forced Dividend Smoothing Deleverage or Increase Leverage? An Evaluation Based on Differentiated Dividend Regulation Policy. Finance&Trade Economics, 2020,41(09):86-99.
[29] An Ling, Du Yuanlu. The Impact of the State-Owned Capital Operating Budget System on Dividend Smoothing. Finance and Accounting Monthly, 2025,46(04):54-60.
[30] Yang Cuicui, Chen Yanli. Managerial Overconfidence and Dividend Smoothing. Review of Accounting and Control, 2024(01):106-132.
[31] Jiang Ting. Mediation Effects and Moderation Effects in Empirical Causal Inference Research. China Industrial Economics, 2022(05):100-120.
[32] Ma Chen, Liao Jinhong, Chen Kejing. The Investor Service Center's Yellow Card Warning: Spillover Effects of Regulatory Minority Shareholders' Exercise of Rights on Audit Quality. Accounting Research, 2025(02):176-190.
[33] Li Minghui, Liu Xiaoxia. Governance Effects of Reverse Mixed Ownership Reform: From the Perspective of Two Types of Agency Costs. China Economic Studies, 2025(02):100-115.
[34] Liu Xinming, Wu Haoxiang, Hu Feng, et al. Does Minority Investors' Exercise of Rights Affect Audit Fees? An Empirical Study Based on a Multi-period Difference-in-Differences Model. Auditing Research, 2021(06):80-89.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
