Corporate Cash Dividends and the Environmental Protection Tax: Evidence from China

Cash dividends, as a tangible form of monetary distribution, serve as a fundamental mechanism for remunerating investors for their capital commitments. Beyond manifesting a firm’s commitment to fulfilling its social responsibilities toward shareholders, such distributions potentially shape corporate deliberations regarding accountability toward a broader spectrum of stakeholders. Drawing on behavioral explanations of corporate decision-making, this study examines the association between cash dividend payouts and environmental protection tax burdens among Chinese A-share listed companies from 2018 to 2023. The empirical results indicate a significant and robust negative association between corporate cash dividend payouts and environmental protection tax burdens. Mechanism analysis suggests that this cross-domain behavioral consistency is primarily channeled through the proactive fulfillment of corporate environmental responsibilities. Further inquiry reveals that both government environmental subsidies and media coverage exert positive moderating effects on this relationship. Notably, this observed negative association is particularly pronounced in firms characterized by lower executive environmental awareness, those operating in regions with lenient environmental regulations, companies navigating economic downturns, and those situated within low-pollution industries. This research provides novel evidence for the “governance complementarity” hypothesis, suggesting that financial accountability and environmental stewardship are mutually reinforcing rather than mutually exclusive. Furthermore, it offers a pioneering micro-behavioral perspective on how firms in emerging economies can harmonize shareholder wealth distribution with green transition objectives.