Seminar (Dept. of Accounting)

Title：Protecting Brands, Promoting Payouts: How Trademark Protection Law Shapes Corporate Dividend Policy

Speaker: Zhang Feida, Associate professor, CEIBS

Time：10:00-11:30, May 29th, 2025 (Thursday)

Venue：Room 502, Mingde Business Building

Language：Chinese & English

ABSTRACT:

This paper examines how trademark protection affects corporate dividend policy using the Federal Trademark Dilution Act of 1996 as a quasi-natural experiment. Our empirical analysis shows that firms with famous trademarks significantly increased dividend payments following the FTDA’s passage and reduced them after its subsequent nullification in 2003. These effects are stronger for firms with good information environments, weak corporate governance, high growth opportunities, and low retained earnings than for their counterparts. Additionally, the marginal value of cash holdings decreased following trademark protection, suggesting that markets recognize the reduced need for precautionary savings. Our cross-sectional results provide insights into how trademark protection is related to signaling, agency, and life cycle theories and reveal that legal protection can substitute for financial maturity in dividend decisions. Our findings provide the first causal evidence that intellectual property protection significantly influences dividend policies, highlighting a novel channel through which regulatory changes affect corporate financial decisions.