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Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

This article investigates how corruption (COR) and the COVID-19 (COV) pandemic affect corporate payout decisions. The sample contains 13,865 firm-years over 2012-2020 and 1,950 firms from 18 Muslim countries. Empirical findings show that neither COR nor COV drives dividends (DIV) and repurchases (REP). However, COV x COR negatively and significantly influences DIV. Namely, firms in highly corrupted Muslim countries have higher DIV during the pandemic–the picture changes in the COVID era. Particularly, firms in higher corrupt countries have higher DIV, which aligns with the substitute model of agency costs, but COR does not affect REP in the pandemic age. This research is the first study assessing the impact of COVID-19 on corporate payouts in Muslim countries by employing a robust bias-corrected and unbiased estimator (fractional dependent variable–DPF).

First Page

617

Last Page

636

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Turkiye

Affiliation

Karabuk University

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