Early life trauma and corporate dividend policies: evidence from China

Abstract The current study employs a longitudinal sample 2822 of Shenzhen and Shanghai A-share-listed firms between 2003 and 2017 to examine how directors’ famine experiences influence dividend payout decisions. The findings suggest that directors with famine experience are positively associated with dividend payout policy. Additionally, these findings still hold when we consider the alternative proxies of dividend payout and directors’ early-life intense famine experience, as well as after several other robustness tests, e.g., fixed effect, forward lag, PSM, change sample, and Tobit regression. Theoretically, this study’s outcomes stand in line with the imprinting theory (directors’ childhood disaster experience has a lasting impact on their process of decision-making) and signaling theory (management is usually reluctant to cease or reduce dividends to avoid disclosing negative information regarding firms’ profitability).