Infectious diseases, dividend policy, and independent directors: Evidence from textual analysis

Saranyu Ungpakorn, Pattanaporn Chatjuthamard, Pornsit Jiraporn, Piyachart Phiromswad

Research output: Contribution to journalArticlepeer-review

Abstract

We investigated the effect of uncertainty associated with infectious diseases on corporate dividend policy. We used a unique text-based measure of infectious diseases that includes not only the Covid-19, but also other important diseases, such as SARs, MERs, and Ebola. Based on a sample of 287,151 firm-year observations across four decades (from 1985 to 2021), our results show that a higher level of uncertainty associated with infectious diseases significantly reduce dividends. Interestingly, we also found that having more independent directors on the board mitigates the negative effect of uncertainty associated with infectious diseases on dividends which implies that the reduction in dividends was partly driven by agency conflicts. We performed several robustness checks which confirm that our findings are unlikely to be affected by endogeneity issues.

Original languageEnglish (US)
Article numbere0281109
JournalPloS one
Volume18
Issue number2 February
DOIs
StatePublished - Feb 2023

All Science Journal Classification (ASJC) codes

  • General

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