Article ID Journal Published Year Pages File Type
980397 The Quarterly Review of Economics and Finance 2012 16 Pages PDF
Abstract

Using a sample of 22,374 firms from 35 countries, we examine the role of creditor rights, shareholder rights, and corporate governance in determining corporate dividend policy. We find that, while all three variables play a significant role in determining both the likelihood and the dividend amount, the effect of country-level creditor rights dominate. In subsequent analysis, we show that the outcome model is most effective in countries with strong creditor rights. When creditor rights are weak, creditors demand, and firms consent to lower dividends. These findings show that creditors, and not shareholders, exert the greatest influence over corporate dividend policy.

► We explore the relationship between shareholder and creditor rights and dividend policy. ► We measure shareholder rights at the firm- and country-level. ► The outcome model of dividends is most effective when shareholder and creditor rights are strong. ► The outcome model of dividends is much less effective when creditor rights are weak. ► Creditors exert the greatest influence on corporate dividend policy.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
, ,