Cross-listings, Growth Opportunities and Dividend Policy:A Test Based on Government Intervention Hypothesis
QIN Jiaqi, SHAO Xinjian, XIAO Lisheng
School of Business, Nankai University;
School of International Trade and Economics, University of International Business and Economics;
Institute of World Economics and Politics,Chinese Academy of Social Sciences
Abstract:
Although bonding hypothesis which is prevailing in the research area of cross-listings has received a great many tests, it is necessary to further investigate whether it is applied to the cases of non-US countries or areas. Based on the historical context of Chinese H+A cross-listings and hypothesis of government intervention, we confer that H+A companies have lower growth opportunities, less dividend pay-out ratio, and lower willingness of dividend payment, due to greater intervention from government. With 5602 observations of unbalanced panel data from 2007 to 2014, the empirical results support our hypothesis completely. Even after controlling the problem of sample selection bias and endogeneity with the methods of treatment effect model, bivariate probit model, propensity score matching, and bias-corrected matching, our results remain robust. Further investigation also shows that H+A companies have greater likelihood to over-invest, lower sensitivity between compensation of top 3 board directors and firm performance, and lower sensitivity between CEO turnover and performance, which strengthens the government intervention hypothesis that serves as the foundation of this paper.
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