Agency Problems and Dividend Policies around the World

Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny

Scholarly Articles from Harvard University Department of Economics

Abstract: This paper outlines and tests two agency models of dividends. According to the “outcome†model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the “substitute†model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross-section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends.

Date: 2000
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Citations: View citations in EconPapers (912)

Published in The Journal of Finance

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http://dash.harvard.edu/bitstream/handle/1/30747163/Agency_Problems.pdf (application/pdf)

Related works:
Journal Article: Agency Problems and Dividend Policies around the World (2000)
Working Paper: Agency Problems and Dividend Policies Around the World (1998)
Working Paper: Agency Problems and Dividend Policies Around the World (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:30747163

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