Impact of fund cliques on corporate cash dividends: Evidence from China

Utilizing 2007-2021 data on Chinese A-share listed companies, this study explores how fund cliques affect corporate cash dividends. The results reveal that fund cliques can significantly reduce corporate cash dividends. This conclusion is verified after addressing possible endogeneity concerns and conducting a series of robustness tests. Mechanism tests indicate that ownership concentration and agency cost are the primary channels. The results further show that the negative effect of fund cliques on cash dividends is more significant in larger firms, as well as in firms that have lower regional investor protection and greater media attention. Furthermore, we find that fund cliques can significantly increase corporate stock dividends, and the reduction of cash dividends promotes fund cliques' share lessening, from which funds can obtain higher share returns. This study has some implications for protecting shareholder rights and maintaining capital market stability.