Work

Dividend Policy with Controlling Shareholders

Year: 2015

Type: article

Abstract: This Article investigates the determinants of dividend policy in firms with concentrated ownership structures. A review of the empirical literature shows that dividend payout ratios are lower in firms with controlling shareholders. We explain this finding as a consequence of the legal rules governing cash distributions, which leave the dividend decision in the hands of the firm insiders, and the lack of monitoring mechanisms for checking the power of controlling shareholders. The analysis of the empirical evidence on dividend policy points to the existence of an unresolved agency conflict between controlling shareholders and outside investors. We conclude that controlling shareholders are currently using the dividend policy to expropriate minority shareholders.

Source: Theoretical Inquiries in Law

DOI: 10.1515/til-2015-006

Authors: Maribel Sáez, María Gutiérrez

Institutions: Universidad Carlos III de Madrid, Universidad Autónoma de Madrid

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W1976072041