Abstract
AbstractWe study the role of state controlling shareholders in corporate payout policy. The State Capital Operation Program in China requiresparentcentral state-owned enterprises (CSOEs) to contribute part of their consolidated income to a new fiscal fund. We find thatlistedCSOEs, partially controlled byparentCSOEs, experience significant reductions in dividend payouts as the income-contribution ratio increases. The dividend reductions are concurrent with increases in intragroup resource transfers—listedCSOEs’ loans to, and commercial trades with, group peers. The program yields adverse consequences forlistedCSOEs’ investment and employment, yet being mitigated by group-level dividend reductions.
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