When Investors Speak, Do Firms Listen? The Role of Investors' Dividend-related Complaints from Online Earnings Communication Conferences

We study whether investor voice affects firm policy. Using a novel dataset of the transcripts of online earnings communication conferences (OECC) of Chinese listed firms during 2006 and 2015, we show that firms do respond to investor complaints about dividend policy with increased future dividends. We find that the number of dividend-related questions raised by investors, the number of complaints (questions with negative attitudes), firm executive responsiveness, and CEO attendance in the OECC are positively associated with future dividend payouts. Moreover, positive responses are concentrated in firms facing greater pressure from peers, the market, and the regulator. Our additional analysis shows that the increase in payouts in response to investors' voice is not at the expense of cutting value-increasing investment. Overall, our results suggest that the online interactive platform empowers shareholders' voice and helps them to conduct a successful dialogue with firm managers in a cost-effective way.