Dividend policy and earnings management across countries

Wen He, Lilian Ng, Nataliya Zaiats, Bohui Zhang

Research output: Contribution to journalArticlepeer-review

75 Citations (Scopus)


This paper examines whether dividend policy is associated with earnings management and whether the relationship varies across countries with wide-ranging degrees of institutional strength and transparency. Based on a sample of 23,429 corporations from 29 countries, we show that dividend payers manage earnings less than dividend non-payers, and that this evidence is stronger in countries with weak investor protection and high opacity. Further, we find that dividend payers manage earnings less when they issue equity following dividend payments, and that this result is more pronounced in countries with weak institutions and low transparency. Overall, our evidence suggests that firms may employ dividend policies associated with less earnings manipulation to mitigate agency concerns and to establish credible reputation, thereby facilitating access to external funds.
Original languageEnglish
Pages (from-to)267-286
Number of pages20
JournalJournal of Corporate Finance
Publication statusPublished - Feb 2017
Externally publishedYes


  • Dividends
  • Earnings management
  • Agency problems
  • Investor protection
  • Equity issuance


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