The influence of the CEO and the largest shareholder on dividend payout policy in Thailand

Thitima Sitthipongpanich ()
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Thitima Sitthipongpanich: Dhurakij Pundit University

No 3405493, Proceedings of Business and Management Conferences from International Institute of Social and Economic Sciences

Abstract: In a setting of weak law enforcement and low investor protection, minority shareholders may find it difficult to extract cash from a company. This paper examines whether or not the CEO and the largest shareholder affect dividend decisions. Using a sample of Thai firms, I find that the CEO tenure and the ownership of the largest shareholder increase the likelihood of a dividend payout. As a result of high commitment and incentives, CEOs and the largest shareholder use dividend payments as a mechanism to mitigate free cash flow problems and reduce potential expropriation of minority shareholders. In addition, the possibility of a dividend payout decreases if firms are controlled by domestic financial institutions. Domestic financial institutions seem to play a significant role in monitoring management teams; consequently, the need for a dividend payment in alleviating agency costs is lower than other firms. Moreover, firms are more likely to pay dividends when they have higher profitability and a lower leverage ratio.

Keywords: Dividend; CEO; large shareholder; agency costs; Thailand (search for similar items in EconPapers)
JEL-codes: G30 G35 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2016-04
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-sea
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Published in Proceedings of the Proceedings of the 3rd Business & Management Conference, Lisbon, Apr 2016, pages 243-252

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Persistent link: https://EconPapers.repec.org/RePEc:sek:ibmpro:3405493

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