Social capital and dividend policies in US corporations

Chun Keung Hoi, Yun Ke, Qiang Wu, Hao Zhang

Research output: Journal article publicationJournal articleAcademic researchpeer-review


We find that social capital, as captured by associational networks and social norms in US counties where corporate headquarters are located, is positively associated with cash dividend payouts in local firms. The positive effect is incremental to other known local factors affecting dividends, is robust to a range of sensitivity analyses, and extends to corporate decisions about whether to pay dividends or not. Social capital mitigates managerial private financial incentives to limit dividends and encourages higher dividends among firms facing greater free cash flow problems. Social capital also attenuates over-investment of free cash flow.

Original languageEnglish
Article number101186
JournalJournal of Financial Stability
Publication statusPublished - Dec 2023


  • Free cash flow problem
  • Informal institutions
  • Managerial opportunism
  • Over-investment
  • Payout policy
  • Social norms

ASJC Scopus subject areas

  • Finance
  • General Economics,Econometrics and Finance


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