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How Does the Largest Shareholder Affect Dividends?

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  • Yasuharu Aoki

Abstract

Focusing on the legal protection of minority shareholders in Japan, which suggests that manager-owned firms are better governed than corporation-owned firms, this study presents a new test of two dividend models: the substitute model and the outcome model. In support of the latter, I find that manager-owned firms pay higher dividends than corporation-owned firms. The paper also examines the association between ownership by the largest shareholder and dividend payments. I find an inverted U-shaped relationship for manager-owned firms and a U-shaped relationship for corporation-owned firms between them. These results can be explained by the benefits and drawbacks of concentrated ownership.

Suggested Citation

  • Yasuharu Aoki, 2014. "How Does the Largest Shareholder Affect Dividends?," International Review of Finance, International Review of Finance Ltd., vol. 14(4), pages 613-645, December.
    • Handle: RePEc:bla:irvfin:v:14:y:2014:i:4:p:613-645
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    Cited by:

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    2. Song, Xiaobao & Yao, Mingan & Su, Wunhong & Lin, Danming, 2021. "The impact of ultimate controller’s ownership on cash dividend policy based on a comparative analysis between owner-management and professional-management modes," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    3. Shumi Akhtar, 2018. "Dividend policies across multinational and domestic corporations – an international study," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(3), pages 669-695, September.
    4. Mark Wallis, 2021. "The effects of relaxing Australia’s statutory dividend restrictions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 3685-3733, June.
    5. Gregory Jackson, 2016. "Toward a Conceptual Framework for Understanding Institutional Change in Japanese Capitalism: Structural Transformations and Organizational Diversity," Working Papers halshs-01643921, HAL.
    6. Li, Wanli & Zhou, Jingting & Yan, Ziqiao & Zhang, He, 2020. "Controlling shareholder share pledging and firm cash dividends," Emerging Markets Review, Elsevier, vol. 42(C).
    7. Suman, Samridhi & Singh, Shveta, 2022. "The Role of Multiple Large Shareholders in Dividend Payouts: Evidence from India," American Business Review, Pompea College of Business, University of New Haven, vol. 25(1), pages 120-151, May.

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