This paper investigates the impact of economic policy uncertainty (EPU) on the dividend policy of listed companies in China, along with its underlying mechanisms. Using panel data from 4421 Chinese listed companies from 2007 to 2021, the research shows that EPU significantly increases cash dividends. This effect is more pronounced among smaller, non-state-owned companies with lower equity concentration and fewer financial constraints. The mechanisms involve increased investor demand for dividends, higher agency costs, and reduced business growth opportunities.

Chuanzhen Li, Liang Zhao, Yiwen Zhang