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- Title
DOES SOCIAL RESPONSIBILITY IMPACT DIVIDEND PAYOUT? EVIDENCE FROM PUBLIC INSURANCE COMPANIES.
- Authors
Haibo Yao; He, Ling T.; Casey, K. Michael
- Abstract
This study uses a modified version of Rozeff's (1982) transaction cost-agency cost tradeoff model to test the relation between dividend payment and a firm's environment, social and governance (ESG) ratings for insurance companies. Studying a regulated industry enables us to determine whether regulation replaces the need to pay dividends to convey information to investors. OLS regression results indicate that the social rating (SOC) is the sole significant ESG explanatory variable that affects dividend payout policy. Overall, our findings indicate that insurance firms consider social ratings in establishing their dividend policy. Specifically, given the sign of the relationship, insurance companies with better social responsibility ratings pay higher dividends. This finding could be the result of regulatory scrutiny faced by insurance firms, which affirms the need to subject the firm to the external scrutiny of the financial markets. This paper is the first paper to date that evaluates whether a relationship exists between insurance company dividend policy and proxies for environmental impact, social responsibility and corporate governance.
- Subjects
DIVIDEND policy; INSURANCE companies; SOCIAL responsibility; SOCIAL impact; INVESTMENT information; DIVIDENDS; FINANCIAL planning
- Publication
Journal of International Business Disciplines, 2022, Vol 17, Issue 2, p1
- ISSN
1934-1814
- Publication type
Article