Why do privatized firms pay higher dividends?

Abhinav Goyal (), Shrikant P. Jategaonkar and Cal B. Muckley

Journal of Corporate Finance, 2020, vol. 60, issue C

Abstract: We examine state income and reputation incentives to account for the high dividends of privatized firms. Consistent with these agency-cost based incentives, we show strong and robust evidence that the extent of state ownership is positively related to corporate dividends. We distinguish between the empirical importance of these incentives using variation in the rule of law to protect minority shareholders, the fiscal deficit and the political orientation of the state. Our findings show that an incentive to enhance the state's reputation with minority shareholders can account for the high dividends of privatized firms.

Keywords: Privatization; State ownership; Payout policy; Dividends; Minority shareholders; State income; State reputation (search for similar items in EconPapers)
JEL-codes: G35 L25 L33 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:60:y:2020:i:c:s0929119918303900

DOI: 10.1016/j.jcorpfin.2019.101493

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