 The effect of ownership structure on corporate payout policy and performance: Evidence from Korea's exogenous dividends tax shockYu Kyung Lee Pacific-Basin Finance Journal, 2022, vol. 73, issue C Abstract: For three years, from 2015 to 2017, the Korean government granted temporary tax benefits to shareholders of firms that exceeded certain thresholds to qualify as high-dividend firms. Using the temporary tax cut as an exogenous tax shock imposed on the market, I examine the impact of the tax cut on high-dividend firms' changes in dividend policy and firm performance, focusing on ownership by majority shareholders. I find that the majority shareholders are more likely to meet the requirements of high-dividend firms to enjoy temporary tax benefits when they have more stake. I also reveal that the dividends increase with the majority shareholders' level of ownership in high-dividend firms, while tax-advantaged stock repurchases decrease. Finally, I find that the majority shareholders' level of ownership in high-dividend firms has a significantly negative effect on the firms' short- and long-term performance. These results suggest that the tax reforms led to agency problems. Keywords: Corporate dividends policy; The dividends tax reform; Majority shareholder; Agency problems (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000580 DOI: 10.1016/j.pacfin.2022.101763 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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