Premium
How Does the Largest Shareholder Affect Dividends?
Author(s) -
Aoki Yasuharu
Publication year - 2014
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12039
Subject(s) - shareholder , corporation , dividend , business , dividend policy , affect (linguistics) , outcome (game theory) , monetary economics , finance , accounting , economics , corporate governance , microeconomics , linguistics , philosophy
Focusing on the legal protection of minority shareholders in J apan, which suggests that manager‐owned firms are better governed than corporation‐owned firms, this study presents a new test of two dividend models: the substitute model and the outcome model. In support of the latter, I find that manager‐owned firms pay higher dividends than corporation‐owned firms. The paper also examines the association between ownership by the largest shareholder and dividend payments. I find an inverted U ‐shaped relationship for manager‐owned firms and a U ‐shaped relationship for corporation‐owned firms between them. These results can be explained by the benefits and drawbacks of concentrated ownership.