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The effects of ownership structure on dividend policy: Evidence from seasoned equity offerings (SEOs)

Anh Ngo, Hong Duong, Thanh Nguyen and Liem Nguyen

Global Finance Journal, 2020, vol. 44, issue C

Abstract: This paper examines the effects of ownership structure on dividend policy, specifically the role of controlling shareholders in shaping dividend policy in a sample of firms that pay dividends and issue new equity simultaneously. The results show that managers in weakly governed firms are more likely to initiate customized dividends to meet outside large shareholders' needs while simultaneously using costly external capital to finance new investment projects. This paper contributes to the existing literature on agency problems by explaining why firms engage in this suboptimal dividend policy: it allows large shareholders to extract private benefits.

Keywords: Dividend policy; Large shareholders; SEO underpricing; Equity offerings (search for similar items in EconPapers)
JEL-codes: G32 G34 G35 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.gfj.2018.06.002

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