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Cash dividends and investor protection in Asia

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  • Goyal, Abhinav
  • Muckley, Cal

Abstract

We study the importance of investor rights in payout policy determination in Asia, using a sample of up to 52,778 firm years. The listed Asian firms located in relatively high investor protection, common law countries, have a greater tendency to payout and, if they do so, they tend to pay out more. We also examine the importance of distinctive creditor and minority shareholder rights in respect to payout policy determination. In our study of a variety of payout events (decisions to pay out, to initiate or omit payout and to markedly increase or decrease payout), we show that this set of payout events is principally determined by competing creditor and minority shareholder rights, rather than managerial sought reputation related effects, to diminish the cost of capital. Our findings indicate that creditors exert significant and far reaching influence over corporate payout policy decision-making, however, the importance of the agency costs of equity predominates.

Suggested Citation

  • Goyal, Abhinav & Muckley, Cal, 2013. "Cash dividends and investor protection in Asia," International Review of Financial Analysis, Elsevier, vol. 29(C), pages 31-43.
  • Handle: RePEc:eee:finana:v:29:y:2013:i:c:p:31-43
    DOI: 10.1016/j.irfa.2013.03.009
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    References listed on IDEAS

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    Cited by:

    1. Thitima Sitthipongpanich, 2016. "The influence of the CEO and the largest shareholder on dividend payout policy in Thailand," Proceedings of Business and Management Conferences 3405493, International Institute of Social and Economic Sciences.
    2. Paul McGuinness & Kevin Lam & João Vieito, 2015. "Gender and other major board characteristics in China: Explaining corporate dividend policy and governance," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 989-1038, December.
    3. repec:eee:finlet:v:23:y:2017:i:c:p:133-136 is not listed on IDEAS
    4. repec:eee:glofin:v:34:y:2017:i:c:p:1-15 is not listed on IDEAS

    More about this item

    Keywords

    Payout policy; Dividends; Share repurchases; International financial markets;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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