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| Author: | Kinkki, S. |
| Title: | Minority protection and dividend policy in Finland |
| Journal: | European Financial Management
2008 : JUN, VOL. 14:3, p. 470-502 |
| Index terms: | dividend policy shareholders stock ownership law Finland Nordic countries European Union |
| Freeterms: | agency problems minority protection |
| Language: | eng |
| Abstract: | This paper deals with the issue whether legal-based minority protection (hereafter as: min-prot.) affects corporate cash dividends in Finland. The Finnish Company Act states that shareholders having 1/10 of all shares can demand a so-called minority dividend (here as: min-divd.), which is 1/2 the profit of the fiscal year, yet no more than 8 percent of the equity. This kind of a min-divd. is rarely used in European Union (EU) countries. It is found, that min-prot. is a better influence over managerial control than controlling shareholders (as: ctrl-shrs.) having absolute voting power. When there ctrl-shrs. and coalition costs are lowest, min-prot. in Finland is better than min-prot. in mandatory dividend countries. Agency costs could be decreased both vertically and horizontally by combining strong shareholder rights, as in the USA, and min-divd., as in Finland. |
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