Companies that pay out higher dividends are statistically more likely to be run by ethical managers with high personal integrity.
March 31, 2026
Original Paper
Dividend Policy and Corporate Integrity: Insights from Textual Analysis of Earnings Calls
SSRN · 6470578
The Takeaway
Dividends aren't just a financial choice; they act as a 'tangible signal' of honesty. By committing to regular cash payouts, high-integrity managers effectively take their own financial resources 'hostage' to prove to shareholders that they aren't hiding or wasting company money.
From the abstract
Using an advanced measure of corporate integrity derived from textual analysis of earnings conference calls, we show that firms with stronger corporate integrity distribute significantly larger dividends. Consistent with agency theory, greater integrity reduces agency conflicts and encourages managers to return excess cash to shareholders. In doing so, high-integrity firms back rhetorical signals of honesty with the tangible financial commitment of dividends, transforming ethical claims into ver