The relation between dividends and insider ownership in different legal systems: international evidence

Jorge Farinha (jfarinha@fep.up.pt) and Lopez-de-Foronda Óscar (oscarl@ubu.es)
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Jorge Farinha: CETE, Faculdade de Economia, Universidade do Porto

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper provides new international evidence on the relationship between dividend policy and insider ownership by analysing a sample of firms from countries characterised by an Anglo-Saxon tradition and a matching sample of companies from countries with Civil Law legal systems. We hypothesize that, due to the different characteristics of both the legal system and the nature of agency conflicts in firms from those countries, the relation between dividend policies and ownership by insiders will be considerably distinct between the two sets of companies. We find that while in firms from Anglo-Saxon tradition the relation between dividends and insider ownership follows the pattern negative-positive-negative, in Civil Law countries the relation is positive-negative-positive. These results are consistent with our hypotheses and breed new insights into the role of dividend policy as a disciplining mechanism in countries with different legal systems and distinct agency problems.

Keywords: dividend policy; corporate governance; insider ownership; international financial markets; dynamic panel data and GMM estimation (search for similar items in EconPapers)
JEL-codes: G15 G32 G34 G35 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-12
New Economics Papers: this item is included in nep-fin and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The relation between dividends and insider ownership in different legal systems: international evidence (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:por:cetedp:0509

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