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Political sentiment and corporate payouts

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dc.contributor.authorHossain, A.
dc.contributor.authorBenkraiem, R.
dc.contributor.authorKrishnamurti, C.
dc.date.issued2025
dc.description.abstractWe provide empirical evidence of the impact of firm-level political sentiment on dividend policy. Using a sample composed of over 34,000 firm years, we find that a high level of political sentiment is associated with a lower level of dividend payout. The evidence is robust and survives several tests that address potential endogeneity. Our results suggest that managers consider investors' political sentiment in setting dividend policy. When political sentiment is negative, they pay higher dividends to assuage investors' concerns regarding future prospects. Our results are also consistent with the view that firms pay higher dividends to address the agency cost issue that arises from the free cash flow problem during periods of negative political sentiment.
dc.identifier.citationInternational Review of Financial Analysis, 2025; 102(104078):1-15
dc.identifier.doi10.1016/j.irfa.2025.104078
dc.identifier.issn1057-5219
dc.identifier.issn1873-8079
dc.identifier.urihttps://hdl.handle.net/11541.2/42391
dc.language.isoen
dc.publisherElsevier
dc.relation.fundingMemorial University of Newfoundland
dc.relation.fundingSocial Sciences and Humanities Research Council of Canada 430–2020-00275
dc.rightsCopyright 2025 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)
dc.source.urihttps://doi.org/10.1016/j.irfa.2025.104078
dc.subjectdividend policy
dc.subjectpolitical sentiment
dc.subjectbehavioral corporate finance
dc.titlePolitical sentiment and corporate payouts
dc.typeJournal article
pubs.publication-statusPublished
ror.mmsid9916959336801831

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