Creditor rights, culture and dividend payout policy

Julie Byrne and O’Connor, Thomas
Authors registered in the RePEc Author Service: Thomas G. O'Connor ()

Journal of Multinational Financial Management, 2017, vol. 39, issue C, 60-77

Abstract: We study how creditor rights and culture interact with one another to influence corporate dividend payout policy. Where creditor rights are strong, creditors accept the status quo, which are large dividends in individualist and small dividends in collectivist traditions, respectively. Culture influences dividend payout where creditor rights are weak. In collectivist countries where group cohesion among corporate stakeholders results in perceived lower agency costs of debt and equity, creditors place few if any restrictions on dividend payout given weak creditor rights. In contrast, in individualist traditions, creditors continue to restrict dividend payouts under weak creditor rights. Our findings emphasize the importance of accounting for the interactions between creditor rights and culture in determining dividend policy.

Keywords: National culture; Creditor rights; Dividend policy (search for similar items in EconPapers)
JEL-codes: G30 G35 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (11)

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Working Paper: Creditor rights, culture and dividend payout policy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:39:y:2017:i:c:p:60-77

DOI: 10.1016/j.mulfin.2016.12.002

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