The impact of ultimate controller’s ownership on cash dividend policy based on a comparative analysis between owner-management and professional-management modes

Xiaobao Song, Mingan Yao, Wunhong Su and Danming Lin

The North American Journal of Economics and Finance, 2021, vol. 57, issue C

Abstract: This study uses Chinese listed firms to examine the relation between the ultimate controller’s ownership and cash dividends under different allocation modes of management rights. The empirical results show that under the professional-management mode, the ultimate controller’s ownership and dividend payments form an inverted U-shaped relation which results from the ultimate controller’s monitoring and collusion with the executive. Under the owner-management mode, the ultimate controller’s ownership and dividend payment levels assume a U-shaped relation which is attributed to its interest encroachment and convergence effect. The shape flip from professional-management to owner-management is the result of the changing opportunity cost of the controller’s dividend payments.

Keywords: Ownership; Cash dividend; Professional-management; Owner-management (search for similar items in EconPapers)
JEL-codes: G34 G35 M40 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000681

DOI: 10.1016/j.najef.2021.101439

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