Passing the dividend baton: Family succession and cash dividends

This paper focuses on the changes in cash dividends in the process of family succession as Chinese family businesses are experiencing a high incidence of "passing the baton" from patrilineal founders to their heirs. The result shows that cash dividends of family businesses experience a change of first increase and then decrease in the process of family succession. The mechanism test shows that the changes in business strategy and family involvement during family succession play an intermediary role in the effect of family succession on cash dividends. Finally, in the cross-sectional analysis, we find that non -family second blockholders will strengthen the change in cash dividends that increase first and then decrease during the family succession, and a better investor protection environment will alleviate the cash dividends reduction after the succession is completed. Our contributions will be of interest to investors, researchers, and policymakers in emerging markets.