Covid-19 crisis and corporate cash dividend policies: evidence from Chinese listed companies

Drawn on signalling theory, this paper investigates the impact of uncertainty caused by COVID-19 on corporate dividend policy. Using data from Chinese listed companies, the empirical results document a negative relationship between the COVID-19 crisis and corporate cash dividend payments. Moreover, the negative association between COVID-19 and cash dividend is more pronounced in large-scale firms and state-owned enterprises (SOEs). These findings imply that, compared with large-scale firms and SOEs, the competitive position of small enterprises and non-SOEs are more fragile and thus more dependent on cash dividends to release positive signals to outsiders, so as to deal with the uncertainty caused by COVID-19. In further analysis, this study also finds that those industries related to transportation and entertainment have a negative effect during the epidemic, and they are more likely to cut dividends to assure additional cash and flexibility.