Dividend Policy and Institutional Ownership: Empirical Evidence using a Propensity Score Matching Estimator

Richard Hofler, Julie Elston and Junsoo Lee ()

Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group

Abstract: This study investigates the relationship between institutional ownership and dividend payout behavior of the firm in Germany. Using a propensity scoring method estimator to control for endogeneity problems, we find evidence that neither institutional ownership nor bank control is statistically significant in determining dividend payouts. These findings are consistent with stylized facts regarding the nature of the German institutional environment, which, through the rights of management to retain a significant percentage of the net profits of the firm and lack of tax incentives, reduce agency costs associated with conflicts between management and shareholder interests regarding use of the firm's free cash flow.

JEL-codes: C0 G3 G32 G35 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2004-02
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:esi:egpdis:2004-27

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