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Stockholder conflicts and dividends
Berzins, Janis; Stacescu, Bogdan; Bohren, Oyvind
Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa
Conflicts of interest between majority and minority stockholders affect a large proportion of firms in any economy, but has received little attention in the empirical literature. We examine the link between the potential for such conflicts and the firm's payout policy on a large sample of Norwegian private firms with controlling stockholders and detailed ownership data. Our evidence shows that the stronger the potential conflict between the stockholders, the higher the proportion of earnings paid out as dividends. This tendency to reduce stockholder conflicts by dividend payout is more pronounced when the minority is diffuse and when a family's majority block is held by a single family member. We also find evidence that a minority-friendly payout policy is associated with higher future minority investment in the firm. These results are consistent with the notion that potential agency costs of ownership are mitigated by dividend policy when the majority stockholder benefits from not exploiting the minority.
336 - Finances. Banca. Moneda. Borsa
Accionistes minoritaris
Empreses, Direcció general d'
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42 p.
Working Paper
Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa
Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa);12/2

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