Political freedom and corporate payouts

Omrane Guedhami, Chuck C.Y. Kwok, Liang SHAO*

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    15 Citations (Scopus)


    We study the effect of a country's political freedom status on corporate payouts around the world. In both OLS and two-stage regressions, we find that firms in less free countries pay out more cash, suggesting that low political freedom is associated with a less friendly investment environment. Consistent with this view, we further find that firms reduce payouts when a country's political freedom status improves, while they tend to pay out past excess cash and cut future investment in the face of a deterioration in political freedom. In additional analysis, we also find that firms in less free countries do not pay out cash mainly to ease agency concerns: cash payouts in these countries are more volatile and hence less valuable.

    Original languageEnglish
    Pages (from-to)514-529
    Number of pages16
    JournalJournal of Corporate Finance
    Publication statusPublished - 1 Apr 2017

    Scopus Subject Areas

    • Business and International Management
    • Finance
    • Economics and Econometrics
    • Strategy and Management

    User-Defined Keywords

    • Freedom
    • Payout policy
    • Political institutions


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