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Family control, external governance mechanisms, and dividend payouts

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  • Teng, Chia-Chen
  • Li, Shaomin
  • Yang, J. Jimmy

Abstract

This paper examines the ways in which three external governance mechanisms, namely market preferences, institutional investors, and debtholder monitoring, influence dividend payout decisions under a family-governance system. We find that family firms issue lower dividends when the dividend premium is high in the market. Institutional investors and family-controlled governance mechanisms interact to increase dividend payouts. Family firms under greater debtholder monitoring pay out more cash to shareholders. Our findings generate important policy implications.

Suggested Citation

  • Teng, Chia-Chen & Li, Shaomin & Yang, J. Jimmy, 2021. "Family control, external governance mechanisms, and dividend payouts," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 198-209.
    • Handle: RePEc:eee:quaeco:v:79:y:2021:i:c:p:198-209
    DOI: 10.1016/j.qref.2020.05.012
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    More about this item

    Keywords

    Corporate governance; Dividend payout; Debtholder; Institutional investors;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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