Rent Extraction by Large Shareholders: Evidence Using Dividend Policy in the Czech Republic

Jan Hanousek and Jan Bena

FMG Discussion Papers from Financial Markets Group

Abstract: Using cross-sectional analysis of corporate dividend policy we show that large shareholders extract rents from forms and expropiate minority shareholders in the weak corporate governance environment of an emerging economy. By comprising divideneds paid across varying corporate ownership structures- concentration, type, and domicile of ownership - we quantify these effects and reveal that they are substantial. We find that the target payout ratio for firms with majotiry ownership is low but that the prescence of a significant minority shareholder increases the target payout ratio and hence precludes a majority owner from extracting rent. In contrast to other studies from developed markets, our unique dataset from teh Czech Republic for the period 1996-2003 permits us to take account of teh endogencity of ownership.

Date: 2006-03
New Economics Papers: this item is included in nep-acc, nep-fmk and nep-tra
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Related works:
Journal Article: Rent Extraction by Large Shareholders: Evidence Using Dividend Policy in the Czech Republic (2008)
Working Paper: Rent Extraction by Large Shareholders: Evidence Using Dividend Policy in the Czech Republic (2006)
Working Paper: Rent extraction by large shareholders: evidence using dividend policy in the Czech Republic (2006)
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