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Corporate social responsibility and dividend policy
Author(s) -
Cheung Adrian Waikong,
Hu May,
Schwiebert Jörg
Publication year - 2018
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12238
Subject(s) - dividend , corporate social responsibility , dividend policy , earnings , business , equity (law) , monetary economics , economics , financial economics , accounting , finance , public relations , law , political science
This study outlines and tests two corporate social responsibility ( CSR ) views of dividends. The first view argues that firms are likely to pay fewer dividends because CSR activities lower the cost of equity, encouraging firms to invest or hoard cash rather than to pay dividends. The second view suggests that CSR activities are positive NPV projects that increases earnings and hence dividend payouts. The first (second) view predicts that firms with a stronger involvement in CSR activities should be associated with a lower (higher) dividend payouts. The finding supports the second view and is robust.