Corporate governance and dividend policy: Evidence of tunneling from master limited partnerships

Julian Atanassov and Aaron J. Mandell

Journal of Corporate Finance, 2018, vol. 53, issue C, 106-132

Abstract: Using a sample of 85 Delaware master limited partnerships (“MLPs”) from 2004 to 2016, we examine the relation between cash dividend policy and the strength of corporate governance measured by contractual governance provisions, such as fiduciary waiver, mandatory distributions, and voting rights, and by ownership structure. We find support for the tunneling model of dividend determination. Specifically, we document that firms with weaker governance pay out more cash dividends than better governed firms. We also find that, in the presence of low quality governance, these payments reduce firm value as well as the value of the firm's cash holdings, suggesting that they are viewed by the market as a tunneling (extraction) of resources by the general partner at the expense of limited unitholders.

Keywords: Corporate governance; Dividend policy; Master limited partnerships; Tunneling (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092911991730679X
Full text for ScienceDirect subscribers only

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:eee:corfin:v:53:y:2018:i:c:p:106-132

DOI: 10.1016/j.jcorpfin.2018.10.004

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().