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How do creditors respond to disclosure quality? Evidence from corporate dividend payouts

Thomas O'Connor () and Julie Byrne ()
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Julie Byrne: UCD Smurfit Graduate Business School,University College Dublin

Economics, Finance and Accounting Department Working Paper Series from Department of Economics, Finance and Accounting, National University of Ireland - Maynooth

Abstract: Using a sample of 17,544 firms from 28 countries we explore how creditors influence dividend payouts in various disclosure regimes. Poorly-protected creditors do not restrict the practice by firms in opaque regimes of using large dividend payouts to build reputation capital, and place few restrictions on dividend payouts in transparent regimes. In intermediate disclosure regimes creditors place large restrictions on dividend payouts. Dividend payouts are always largest in transparent regimes. Our findings say that the disclosure standards versions of the outcome and substitution agency models of dividends are not mutually-exclusive, and are as effective under weak as they are under strong creditor rights. Classification-G30; G35

Keywords: Dividend payout; creditor rights; disclosure standards; agency outcome and substitution model of dividends (search for similar items in EconPapers)
Date: 2017
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