Dividend policy and business groups: Evidence from Indian firms
AbstractWe invoke theories of dividend policy and the market failure theory of business groups to investigate the impact of group affiliation on the dividend payment decision (to pay or not to pay?) and payout level decision (how much to pay?). We use a large sample of quoted, non-financial, independent and group-affiliated Indian firms. While we find that the payout ratios of group-affiliated firms are higher than those of independent firms, there is no clear evidence to support the view that this is due to the level of diversification or group size. Overall, we find that although they mitigate market imperfections, business groups remain vulnerable to information problems in the dividend payment decision and the payout level decision.
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Bibliographic InfoArticle provided by Elsevier in its journal International Review of Economics & Finance.
Volume (Year): 21 (2012)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/inca/620165
Dividend policy; Business groups; India;
Find related papers by JEL classification:
- G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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- Bradford, William & Chen, Chao & Zhu, Song, 2013. "Cash dividend policy, corporate pyramids, and ownership structure: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 445-464.
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