Does investor protection affect corporate dividend policy? Evidence from Asian markets

This study investigates the nexus between investor protection and dividend policy for 517 listed nonfinancial firms operating in Asian countries between the period 2008 and 2017. The dynamic panel data model (System-GMM) reveals that stronger investor protection is associated with higher dividend payouts, and firms increase dividends, specifically in response to the rise of the extent of disclosure and director liability and also ease of shareholder suits. Besides, results highlight that firms pay out fewer dividends in cases of growth opportunity particularly in environments with stronger investor protection, a more developed financial market, and a common-law system. Results are robust when alternative specifications are implemented.