Cross-border enforcement of securities laws and dividend payouts

Chen，Xiaoqi1; Chih-Chieh Chris，Hsieh2; Tsang，Albert3; Xiang，Yi4

2022

10.1016/j.bar.2022.101117

British Accounting Review   Impact Factor & Quartile

0890-8389

1095-8347

Following the September 11, 2001 attacks, numerous countries signed a special nonbinding arrangement to enhance cross-border enforcement of securities laws. This agreement is the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU). This study examines whether and how a country's MMoU entry affects firms' dividend payout policies. Relative to domestic US firms, foreign firms cross-listed in the US report a significant increase in dividend payouts after their home country entered the MMoU. Furthermore, the effect of MMoU on corporate dividend payouts is pronounced for (1) firms with high agency costs, (2) countries with low external governance quality, and (3) countries with poor disclosure environments. Furthermore, we find that MMoU significantly changes the corporate governance structure. Our findings collectively corroborate the prediction of the dividend outcome model and are consistent with the notion that strengthening cross-border regulatory enforcement of foreign firms improves protection for outside shareholders and increases dividend payouts.

Agency problems Corporate governance Cross-listing Dividend payout

English

Corresponding

Fundamental Research Funds for the Central Universities[01552E0A-ZK1029];

2-s2.0-85136739867

Scopus

1.The Institute for Financial & Accounting Studies,Xiamen University,China
2.Department of Accounting,Control and Legal Affairs,NEOMA Business School,China
3.SUSTech Business School,Southern University of Science and Technology,China
4.School of Accounting and Finance,The Hong Kong Polytechnic University,China

Chen，Xiaoqi,Chih-Chieh Chris，Hsieh,Tsang，Albert,et al. Cross-border enforcement of securities laws and dividend payouts[J]. British Accounting Review,2022.

Chen，Xiaoqi,Chih-Chieh Chris，Hsieh,Tsang，Albert,&Xiang，Yi.(2022).Cross-border enforcement of securities laws and dividend payouts.British Accounting Review.

Chen，Xiaoqi,et al."Cross-border enforcement of securities laws and dividend payouts".British Accounting Review (2022).