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| Tekijä: | Gugler, K. Yurtoglu, B.B. |
| Otsikko: | Corporate governance and dividend pay-out policy in Germany |
| Lehti: | European Economic Review
2003 : AUG, VOL. 47:4, p. 731-758 |
| Asiasana: | Corporate governance Dividends Policy Germany |
| Kieli: | eng |
| Tiivistelmä: | This paper puts forward a new explanation of why dividends may be informative. There is evidence found that dividends signal the severity of the conflict btw. the large, controlling owner and small, outside shareholders. Accordingly, dividend change announcements provide new information about this conflict. To test the rent extraction hypothesis and discriminate it from the cash flow signaling explanation, information on the ownership and control structure of the firm is utilized. 736 dividend change announcements in Germany are analyzed over the period 19921998 and significantly larger negative wealth effects are found in the order of two percentage points for companies where the ownership and control structure makes the expropriation of minority shareholders more likely than for other firms. The rent extraction hypothesis also has implications for the levels of dividends paid. Larger holdings of the largest owner to reduce are found, while larger holdings of the second largest shareholder to increase the dividend pay-out ratio. Finally, using Lintner's (publ. in American Economic Review 1956, Vol. 46:2 p. 97113) model of dividend determination corroborating results are found. The results call for better minority shareholder rights protection and increased transparency in the course of European Capital Market Reform. |
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