SMEs and dividend payout policy in case of poor legal environment

This article investigates the dividend informational contenthypothesis, showing how managers react to a poor legal environment through positive and credible messages to investors. Weanalyze private and public limited companies between 2015 and2019, exploring the relation between their dividend payout policies and the courts' ability to enforce creditor rights in case ofinsolvency. Based on our results, we can observe a positive relation between judicial delay and the SMEs' decisions on dividendpayouts, meaning that as the inefficiency of courts increases,small businesses are ever more likely to pay out dividends sothat they can send a positive message to the local capital market.On the other hand, our results cannot confirm the same relationfor public limited companies, which operate n the global capitalmarket, highlighting the key role of local ties.