What drives the cash dividend policy of the poorly performing firms in Hong Kong?

Tsz Wan Cheng, Hung Gay Fung, T. Y. Leung

Research output: Journal article publicationJournal articleAcademic researchpeer-review

6 Citations (Scopus)


We use financial data on poorly performing firms in Hong Kong to examine the motives behind paying out cash dividends when they suffer an earnings decline. We test three hypotheses behind the cash dividend policy: the maturity hypothesis, the free cash flow hypothesis, and the self-interest hypothesis of directors (i.e., the cash channeling hypothesis of directors). The findings are largely consistent with the maturity hypothesis and the free cash flow hypothesis but do not support the cash channeling hypothesis, confirming good market transparency and governance of the Hong Kong market. and Center for Pacific Basin Business, Economics and Finance Research.
Original languageEnglish
Pages (from-to)347-361
Number of pages15
JournalReview of Pacific Basin Financial Markets and Policies
Issue number3
Publication statusPublished - 10 Oct 2008


  • Cash dividends
  • Corporate governance
  • Maturity
  • Poor earnings

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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