Does a CEO's culture affect dividend policy?

Abstract

Using a sample of 15,818 firm year observations over the 1996-2015 period, we provide the first evidence on the impact of CEOs cultural background on dividend policy. We find that individualistic CEOs are more likely to pay dividends. Consistent with the private benefits of control and signaling hypotheses, we find that this result is more pronounced in firms with severe agency problems and information asymmetry. This study points to a promising direction for future research to gain a deeper understanding of how the cultural background of managers affect corporate policies and behavior.