Do Co†Opted Directors Influence Dividend Policy?

Pornsit Jiraporn and Sang Mook Lee

Financial Management, 2018, vol. 47, issue 2, 349-381

Abstract: We explore how co†opted directors affect dividend policy. Co†opted directors are those appointed after the incumbent chief executive officer (CEO) assumes office. Our results show that co†opted directors lead to a weaker propensity to pay dividends and, for dividend†paying firms, significantly lower dividend payouts. We also show that board co†option has more explanatory power for dividend policy than does the traditional measure of board effectiveness, that is, board independence. Exploiting the passage of the Sarbanes†Oxley Act as a natural experiment, we show that the effect of board co†option on dividend policy is more likely causal, rather than merely an association.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
https://doi.org/10.1111/fima.12196

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finmgt:v:47:y:2018:i:2:p:349-381

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0046-3892

Access Statistics for this article

Financial Management is currently edited by William G. Christie

More articles in Financial Management from Financial Management Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().