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Do Transparent Firms Pay out More Cash to Shareholders? Evidence from International Cross-Listings


  • I thank an anonymous referee, Bill Christie (Editor), David Haushalter, Jean Helwege, Laura Field, Andrew Karolyi, Michelle Lowry, Darius Miller, Gohar Stepanyan, and seminar participants at the 2008 FMA Annual Meeting for their comments and suggestions. I also thank Karl Lins, Stijn Claessens, Mara Faccio, and Larry Lang for providing the ownership and control structure data. All errors are my own.


This paper examines the relation between agency costs and payout policy using a sample of 755 firms that cross-list shares abroad. Firms increase cash payouts to shareholders by about 9% of earnings after cross-listing on exchanges with high standards of transparency and shareholder protection. The shift in payout policy is more pronounced in firms controlled by management. No shift is observed if shareholder protection in the country of incorporation is already strong, or if the host exchange does not mandate additional disclosure. The findings support the theory that high corporate payouts are the outcome of transparency and shareholder protection.