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Minority Protection and Dividend Policy in Finland


  • Seppo Kinkki


"This paper highlights some theoretical arguments and empirical results on whether legal-based minority protection affects corporate cash dividends in Finland. The Company Act in Finland states that shareholders having one tenth of all shares can demand a so-called minority dividend, which is half of the profit of the fiscal year, yet not more than 8% of the equity. Minority dividend, as in Finland, is rarely used in EU countries. I find, that minority protection is a better influence over managerial control than controlling shareholders having absolute voting power. When there is no controlling shareholder and coalition costs are lowest, minority protection in Finland is better than minority protection in mandatory dividend countries. Combining strong shareholder rights (as in the USA) and minority dividend (as in Finland) could decrease agency costs both vertically and horizontally." Copyright (c) 2007 The Authors Journal compilation (c) 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Seppo Kinkki, 2008. "Minority Protection and Dividend Policy in Finland," European Financial Management, European Financial Management Association, vol. 14(3), pages 470-502.
  • Handle: RePEc:bla:eufman:v:14:y:2008:i:3:p:470-502

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    References listed on IDEAS

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    Cited by:

    1. Huang, Juan Juan & Shen, Yifeng & Sun, Qian, 2011. "Nonnegotiable shares, controlling shareholders, and dividend payments in China," Journal of Corporate Finance, Elsevier, vol. 17(1), pages 122-133, February.
    2. Liu, Chunyan & Uchida, Konari & Yang, Yufeng, 2014. "Controlling shareholder, split-share structure reform and cash dividend payments in China," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 339-357.
    3. Ghosh, Saibal, 2010. "The dividend strategy of Indian companies: An empirical assessment," MPRA Paper 29567, University Library of Munich, Germany.

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