 Dividend policy dispute in a context of concessionaire companies: the role of accounting in the case of Spanish Railway Companies (1920–1930)Beatriz Santos-Cabalgante, Beatriz Garcia Osma and Domi Romero Fúnez Accounting and Business Research, 2024, vol. 54, issue 5, 614-647 Abstract: We study dividend payments and earnings management in railway companies in the first decades of the twentieth century. We argue that the historical organization of the Spanish railway industry as a complex net of 99-year concessionary contracts created predictable incentives for earnings management and rent extraction. The countdown to concessions reversals pressured the State, as residual owner, to subsidize the industry during the 1920s. The State granted two types of public aid to railway companies: to finance increases in wages, and to modernize railway material and infrastructure. We provide novel evidence on the regulation of these aids, their accounting, and their association with dividend payments. Overall, our evidence suggests that despite efforts from the State to establish maximum levels of earnings to report and of ‘permitted’ dividends, the reversal of concessionary contracts gave rise to a principal-principal agency conflict that trapped both the industry and the State and resulted in maximum dividends and equity depletion. Date: 2024 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:acctbr:v:54:y:2024:i:5:p:614-647 Ordering information: This journal article can be ordered from DOI: 10.1080/00014788.2023.2223897 Access Statistics for this article Accounting and Business Research is currently edited by Vivien Beattie More articles in Accounting and Business Research from Taylor & Francis Journals |
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