The relation between dividends and insider ownership in different legal systems: international evidence

Jorge Farinha and Lopez-de-Foronda Óscar ()

The European Journal of Finance, 2009, vol. 15, issue 2, 169-189

Abstract: This paper provides new international evidence on the relationship between dividend policy and insider ownership by analysing a sample of USA, UK and Irish firms characterized by an Anglo-Saxon tradition and a matching sample of other EU companies from Civil Law legal systems. We hypothesize that, due to the different characteristics of both the legal system and the nature of agency conflicts in firms from those countries, the relation between dividend policies and ownership by insiders will be considerably distinct between the two sets of companies. We find that while in firms with an Anglo-Saxon tradition the relation between dividends and insider ownership follows the pattern negative-positive-negative, in Civil Law countries the relation is positive-negative-positive. These results are consistent with our hypotheses and breed new insights into the role of the dividend policy as a disciplining mechanism in countries with different legal systems and distinct agency problems.

Keywords: dividend policy; corporate governance; insider ownership; international financial markets; dynamic panel data and GMM estimation (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/13518470802588718 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The relation between dividends and insider ownership in different legal systems: international evidence (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:15:y:2009:i:2:p:169-189

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REJF20

DOI: 10.1080/13518470802588718

Access Statistics for this article

The European Journal of Finance is currently edited by Chris Adcock

More articles in The European Journal of Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().